A Texas homeowner has a homestead valued at $650,000 with a first mortgage of $400,000. She takes the maximum home equity loan allowed and the lender charges 2 discount points. How much will she pay in discount points?
Correct Answer
C) $2,400
Max total liens = $650,000 × 0.80 = $520,000. Max HEL = $520,000 − $400,000 = $120,000. Points = $120,000 × 0.02 = $2,400.
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Previous Question
A Texas homeowner with a homestead valued at $400,000 and no existing liens takes the maximum home equity loan at 7% annual interest. What is the monthly interest payment?
Next Question
Under the Texas Constitution (as amended effective January 1, 2018), fees on a home equity loan generally cannot exceed 2% of the loan amount (with certain bona fide third-party fees excluded). If a borrower takes a $240,000 home equity loan, what is the maximum allowable fee under the 2% cap?