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?
Correct Answer
A) $4,800
Since the 2018 constitutional amendment (Tex. Const. art. XVI, § 50(a)(6)(E)), the cap on home equity loan fees was reduced from 3% to 2%. $240,000 × 0.02 = $4,800.
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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.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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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?
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A Texas homestead valued at $380,000 has a first mortgage of $144,000. The homeowner takes the maximum home equity loan at 6.5% annual interest. What is the annual interest on this home equity loan?