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?
Correct Answer
C) $10,400
Max total liens = $380,000 × 0.80 = $304,000. Max HEL = $304,000 − $144,000 = $160,000. Annual interest = $160,000 × 0.065 = $10,400.
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In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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.
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Previous 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?
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A Texas homestead is valued at $500,000 with no existing liens. The homeowner takes the maximum home equity loan allowed. All of the following are correct statements about this loan EXCEPT: