What is the new Home Equity law in Texas?
What is Title Insurance?
Why do you need title insurance?
What is tenants and lenders insurance?
How to get the most for your house.
How Real Estate agents help sellers make money.
How to make settlements easier.
What are Ad Valorem Property Taxes?
What is a Homestead? and other Property Facts.

HOME EQUITY IN TEXAS after January 1, 1998

What is a Texas home equity loan?
On November 4, 1997, Texas voters approved an amendment to the Texas Constitution allowing home equity lending. This amendment is long and complicated, but creates the complete framework for home equity lending in Texas. A home equity loan allows the homeowner to borrow money using the homestead as collateral for the loan. These loans were prohibited before the amendment passed. The amendment is effective January 1, 1998.

What’s special about Texas home equity loans?
The amendment has many special features. Some are as follows:

1. Total debt, including the home equity loan, cannot exceed 80% of the agreed fair market value of the property.
2. Maximum fees and costs cannot exceed 3% of the loan. Such fees include lender costs, tax reports, title insurance premiums and surveys.
3. 12 days must pass between the loan application and closing.
4. The loan cannot be funded until a 3 day rescission period passes.
5. Borrowers have no personal liability; the property is the only security for the loan.
6. The loan can only be foreclosed judicially. Other loans in Texas can be foreclosed non-judicially.

How often can I take out a home equity loan? Only one home equity loan can be taken out in any 12 month period.

Can I have more than one home equity loan at a time? No. Only one home equity loan can be placed on homestead property.

If I refinance other loans (purchase money, home improvements and the like) can I get home equity money? Yes. But, beware -- any home equity money makes the entire loan a home equity loan. Then, you are limited to only one open home equity loan at a time and only 1 every 12 months.

Can the lender require other security for a home equity loan? No. Only the home can be security for a home equity loan.

Can agricultural land be used as security for a home equity loan? No. Any land used for agricultural purposes cannot be used for a home equity loan. Agricultural use is any land that receives an agricultural or open space exemption for ad valorem property taxes.

What about dairy farms? Dairy farms may be used as collateral for a home equity loan.

Where can the home equity loan be closed? Home equity loans must be closed only at the lender’s office, a title company or an attorney’s office. Such loans may not be closed at your home or office.

Must the loan have regularly scheduled payment? Yes.

What kind of lender can make a home equity loan? Banks, savings and loan associations, saving banks, credit unions, other federally chartered instrumentalities or persons approved by the U.S. Government can make home equity loans.

More information available HERE.