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Property Tax Rates and Cash-Out Refinance Options in Texas: What Homeowners Need to Know

Property Tax Rates and Cash-Out Refinance Options in Texas: What Homeowners Need to Know

June 15, 2024 by X2 Mortgage

Texas, known for its vast landscapes, diverse cities, and favorable tax environment, attracts homeowners looking to settle in a state with a relatively lower tax burden compared to many others in the United States. Understanding property tax rates and cash-out refinance options in Texas is crucial for homeowners seeking to optimize their financial strategies and investments. In this comprehensive guide, we will explore the intricacies of property tax rates across various counties in Texas and delve into the benefits and considerations of cash-out refinancing.

Property Tax Rates Across Texas Counties

Property taxes in Texas are primarily levied and collected at the county level, and rates can vary significantly depending on the location. Here’s a snapshot of property tax rates in some counties across Texas:


Anderson County: 1.5890%

Andrews County: 1.4270%

Angelina County: 1.6182%

Aransas County: 1.5218%

Archer County: 1.5168%

Armstrong County: 1.5428%


These rates represent the percentage of a property’s assessed value that homeowners must pay annually in taxes to local governments. Factors influencing property tax rates include the county’s budgetary needs, funding requirements for local services such as schools and infrastructure, and the overall economic climate of the area.

Understanding Property Taxes in Texas

Texas does not have a state income tax, making property taxes a significant revenue source for local governments. The Texas Constitution places limits on how much property taxes can increase annually without voter approval, providing some stability for homeowners concerned about tax hikes.

Factors Affecting Property Tax Rates

Local Government Budgets: Counties and municipalities determine their budgetary needs, which directly influence property tax rates.


Property Values: Higher property values typically result in higher tax liabilities, although Texas offers various exemptions and valuation caps to help mitigate tax burdens for homeowners.


Exemptions and Relief Programs: Texas provides several exemptions, including the Homestead Exemption, which reduces the taxable value of a primary residence by up to $25,000 for school district taxes and offers additional relief for homeowners aged 65 and older.


Cash-Out Refinance Options in Texas

Cash-out refinancing allows homeowners to leverage their home equity by refinancing their mortgage for more than the current outstanding balance. This strategy enables homeowners to access cash for various purposes, such as home improvements, debt consolidation, or funding large expenses like education or medical bills.

Benefits of Cash-Out Refinancing

Access to Funds: Homeowners can access a lump sum of cash based on the equity accumulated in their homes, which can be more affordable compared to other types of loans due to lower interest rates.


Potential Tax Benefits: Interest payments on mortgage loans, including cash-out refinances used for home improvements, may be tax-deductible, providing potential tax savings for homeowners.


Consolidation of Debt: By consolidating high-interest debt into a lower-interest mortgage loan, homeowners can potentially save money on interest payments and simplify their financial obligations.

Considerations Before Opting for Cash-Out Refinancing

Impact on Loan Terms: Cash-out refinancing typically extends the repayment period or increases monthly mortgage payments, so homeowners should carefully evaluate the long-term financial implications.


Closing Costs and Fees: Like any mortgage transaction, cash-out refinancing may involve closing costs and fees, which should be factored into the overall cost-benefit analysis.


Home Equity Protection: Using home equity for non-essential purposes carries risks, as failure to repay the loan could lead to foreclosure, potentially jeopardizing homeownership.


Navigating property tax rates and cash-out refinance options in Texas requires careful consideration of local tax policies, financial goals, and personal circumstances. Homeowners can benefit from understanding how property taxes are calculated, leveraging available exemptions, and exploring cash-out refinancing as a strategic financial tool. Whether you’re looking to manage your property tax liabilities or tap into your home equity for financial flexibility, staying informed and seeking professional advice can help you make sound decisions for your long-term financial well-being in the Lone Star State.


For more insights and personalized guidance on managing your property taxes and exploring refinancing options in Texas, consult with a trusted financial advisor or mortgage lender who specializes in Texas real estate and taxation.


This guide aims to empower homeowners in Texas with the knowledge and tools needed to navigate property tax rates and cash-out refinance options effectively. By understanding these concepts, homeowners can make informed decisions that align with their financial goals and enhance their overall financial health.

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