Eduardo and Veronica, a married couple in San Antonio, want to obtain a home equity line of credit (HELOC) on their homestead valued at $600,000. Their first mortgage balance is $350,000. Under Texas Constitution Article XVI, Section 50, what is the maximum credit limit for the HELOC?
Correct Answer
C) $130,000, because total liens cannot exceed 80% of the homestead's fair market value
Under Texas Constitution Article XVI, Section 50(a)(6)(B), total liens on a homestead cannot exceed 80% of its fair market value. With a $600,000 value, the maximum total debt is $480,000. Since $350,000 is already owed on the first mortgage, the maximum HELOC amount is $480,000 - $350,000 = $130,000.
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Previous Question
A Texas borrower with a home equity loan on her homestead wants to make a large lump-sum payment to pay off the loan early. The lender informs her there will be a 3% prepayment fee. Under Texas law, how should the borrower respond?
Next Question
A Texas homeowner obtained a home equity loan that violated the constitutional requirements under Article XVI, Section 50(a)(6). The lender claims it did not know about the violation. The borrower sends a written notice of the defect to the lender. Under Texas law, which of the following correctly describes the cure and forfeiture process?