A Texas homeowner takes a $180,000 home equity loan at 5% annual interest. The lender charges the maximum allowable 3% fee. What is the total of fees plus first month's interest?
Correct Answer
B) $6,150
Fees = $180,000 × 0.03 = $5,400. Monthly interest = $180,000 × 0.05 / 12 = $750. Total = $5,400 + $750 = $6,150.
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Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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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:
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A Texas homestead is appraised at $600,000 with a first mortgage of $288,000. The homeowner takes the maximum home equity loan and pays 1.5 discount points at closing. How much will she pay in discount points?