Miguel takes out a $200,000 home equity loan on his Texas homestead at 6% annual interest. Under Texas law, home equity loans cannot include prepayment penalties. If Miguel pays off the loan after exactly 8 months, how much total interest will he owe?
Correct Answer
B) $8,000
Annual interest = $200,000 × 0.06 = $12,000. For 8 months: $12,000 × (8/12) = $8,000. Texas prohibits prepayment penalties on home equity loans, so Miguel owes only accrued interest.
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An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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A Texas homestead is valued at $450,000 with an existing first mortgage balance of $280,000. Under the Texas Constitution's 80% LTV cap, what is the maximum home equity loan amount the homeowner can obtain?
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A Texas property valued at $525,000 has a first mortgage of $300,000 and a home improvement loan of $50,000. Under the Texas Constitution's 80% LTV cap, how much additional home equity borrowing capacity is available?