A married couple in Texas wants to take a home equity loan. Their homestead is valued at $450,000 and they owe $310,000 on their first mortgage. The lender charges 2 points on the home equity loan. What is the maximum amount of points the couple will pay?
Correct Answer
A) $1,000
Step 1: Calculate the maximum home equity loan under Texas 80% LTV rule. 80% of $450,000 = $360,000. Step 2: Subtract existing liens. $360,000 - $310,000 = $50,000 maximum home equity loan. Step 3: Calculate points. $50,000 x 0.02 = $1,000.
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A Texas homeowner wants to add an addition to the home. The contractor's total bid is $85,000. Which of the following must be completed BEFORE work begins for the contractor to have a valid mechanic's lien on the homestead?
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Under Texas Constitution Article XVI, Section 50(a)(6), a homeowner in Texas must receive counseling before closing a home equity loan. What type of counseling is required?