Carlos and Maria, a married couple in Texas, want to take out a home equity loan on their homestead valued at $400,000. They currently owe $280,000 on their first mortgage. Under Texas Constitution Article XVI, Section 50(a)(6), what is the maximum amount they can borrow through a home equity loan?
Correct Answer
B) $40,000
Under Texas Constitution Article XVI, Section 50(a)(6)(B), the total of all liens on a homestead, including the proposed home equity loan, cannot exceed 80% of the fair market value. 80% of $400,000 = $320,000. Since they already owe $280,000, the maximum home equity loan is $320,000 - $280,000 = $40,000.
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Previous Question
Under the Texas Constitution Article XVI, Section 50, a homeowner's primary residence is protected from forced sale to pay most debts. Which of the following is a lien that CAN be enforced against a Texas homestead?
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A Texas homeowner signs a home equity loan agreement on March 1. Under Texas Constitution Article XVI, Section 50(a)(6)(Q), the homeowner has a right to rescind the loan. When is the earliest the lender may disburse the loan funds?