A Texas homestead is appraised at $500,000. The homeowner has a first mortgage of $350,000 and a second lien of $30,000 for property taxes owed. The homeowner applies for a home equity loan. Under Texas law, what is the maximum home equity loan amount?
Correct Answer
A) $20,000
Under Texas Constitution Article XVI, Section 50(a)(6)(B), total liens on a homestead cannot exceed 80% of FMV. 80% of $500,000 = $400,000. Existing liens total $350,000 + $30,000 = $380,000. Maximum home equity loan = $400,000 - $380,000 = $20,000.
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An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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- → A Texas property owner defaults on both a first mortgage and a second-lien home equity loan. The first mortgage lender forecloses and sells the property at the trustee's sale. Under Texas law, what happens to the second-lien home equity loan?
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Previous Question
Robert and Jennifer, a married couple, own a homestead in Texas. Robert wants to take out a home equity loan. Jennifer objects and refuses to sign the loan documents. Under Texas law, what is the outcome?
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A Texas homeowner takes out a home equity loan and later wants to refinance it. Under Texas Constitution Article XVI, Section 50(f), how long must the homeowner wait after the original home equity loan was closed before refinancing?