A Texas homeowner wants to use the proceeds from a home equity loan to start a small business. The lender tells her that home equity loan proceeds can only be used for home-related expenses. Under Texas Constitution Article XVI, Section 50(a)(6), is the lender correct?
Correct Answer
A) No, because Texas does not restrict how a borrower uses home equity loan proceeds once disbursed
Under Texas Constitution Article XVI, Section 50(a)(6), there are no restrictions on how a borrower may use the proceeds of a home equity loan. Once disbursed, the borrower may use the funds for any purpose — including starting a business, paying for education, or any other expense.
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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.
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.
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- → A Texas property owner defaults on both a first mortgage and a second-lien home equity loan. The first mortgage lender forecloses and sells the property at the trustee's sale. Under Texas law, what happens to the second-lien home equity loan?
- → Under Texas foreclosure law, a property is sold at a trustee's sale on the first Tuesday of the month. The winning bidder pays the full purchase price. Under Texas Property Code, when does the bidder receive a trustee's deed?
- → In Texas, the standard security instrument for real estate loans is a deed of trust rather than a mortgage. Which parties are involved in a Texas deed of trust?
- → Under Texas Constitution Article XVI, Section 50(a)(6), a home equity loan on a Texas homestead must comply with numerous constitutional requirements. All of the following are required provisions of a Texas home equity loan EXCEPT:
- → Under Texas Constitution Article XVI, Section 50, all of the following liens may be enforced against a Texas homestead EXCEPT:
- → A Texas homeowner closes on a home equity loan on January 15. The loan proceeds are not actually disbursed until January 18, three days after closing. The borrower exercises the right of rescission on January 26. Under Texas Constitution Article XVI, Section 50(a)(6), is this rescission timely?
- → A Texas lender fails to cure a constitutional defect in a home equity loan within the required timeframe. The borrower files a lawsuit. Under Texas Constitution Article XVI, Section 50(a)(6)(Q)(x), what is the potential penalty for the lender's failure to cure?
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Previous Question
A Texas homeowner obtained a home equity loan two years ago. The lender recently assigned the loan to a new servicer. The homeowner discovers that the original loan violated the 80% LTV cap. He sends a cure notice to the new servicer. Under Texas Constitution Article XVI, Section 50(a)(6), is the new servicer responsible for curing the defect?
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In Texas deed of trust terminology, what is the borrower called?