I thought I would include some specific sections for certain areas which I am very familiar with...
Texas home equity loans or cash out mortgage loans as they are referred to are very unique in the state of Texas. The highlights are as follows:
- The loans are limited to 80% of the appraised value of the home
- A 12 day "cooling off period" is required before the transaction can be closed
- The borrower, or borrowers, must review the HUD-1 settlement statement 24 hours prior to closing the loan
- State law permits only one home equity loan in any 12 month period
- The maximum a borrower can be charged for this type of loan, including all fees is 3% of the loan amount
- Once a customer has taken out a home equity loan on their homestead, each time they refinance that property it is considered a home equity loan (provided, of course, that it is still their homestead property)
Those are the basic highlights for Texas home equity loans, there are many more specific and detailed particulars that must be adhered to but those are the essentially most important ones. As Texas differs from any other state regarding home equity loans, homeowners in Texas cannot take advantage of higher loan to value products available in other states (such as 125% equity loans) but this is in place to protect the consumers equity in their homestead property.
The Texas home equity loan laws only apply to the customers primary residence (homestead) and does not apply to any other properties that the customer may own. There are also many additional limitations regarding the type of loans that are permitted and the required amortization of the loans. Just recently, the State of Texas passed legislation allowing home equity lines of credit. These types of loans must still adhere to the 80% rule and all other State laws regarding home equity loans but does give the customer some addtiional flexibility and options.
Any comments and/or questions will be answered directly and on this posting.
