Texas real estate laws overview
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Texas real estate laws overview

The real estate laws in Texas are complex and stringent ...

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The home mortgage business sauntered into Texas in 1997 when state laws were amended to allow home equity loans. Texans, being who they are, are proud of their homesteads and had a strong desire to protect homeowners from the possibility of losing their homes through financial fiascos. The real estate laws in Texas are complex and stringent, but always trying to protect families and homeowners.

The amended laws provide strong consumer protection. A basic understanding of the real estate laws in the lone star state provides the knowledge needed to begin the process of acquiring a home equity loan with eyes wide open. Following are some of the laws, boiled down, that consumers should be aware of before securing a home mortgage loan.

Beginning with the cold hard figures, your entire debt, including the home equity loan cannot exceed 80% of the fair market value for your house. What does this mean? If you bought a home for $100,000 and you’ve paid $75,000 toward the mortgage with $25,000 left to go you could possibly borrow up to $55,000. If you’ve not paid more than 20% of the mortgage, you’re not eligible for a loan. A home at $100,000 with a mortgage of $75,000 still to pay eclipses the 80% fair market value, so mortgaging your home at this time is not permitted.

Before acquiring a second home mortgage loan, the first one must be paid in full.

Only one loan per year, thank you very much. Even if you pay it off well in advance, you cannot get another loan within the same calendar year by mortgaging your home.

If you own property and pay taxes on it as “open space” or “agriculture” you cannot borrow against this property.

Only licensed folks can make a home equity loan with two exceptions: a company that sells and provides financing or a relative within the second degree which means anyone who shares at least one quarter of your genes, like an aunt, uncle, grandparent, child, mother, father, etc.

Lenders cannot exceed 3% of the principle loan when charging fees outside of interest.

A lender cannot insist that additional assets be mortgaged along with the home.

There are only three locations where a mortgage may be closed: the company’s office, an attorney’s office, or at the office of a title company.

After applying for a mortgage loan, the borrower has twelve days until closing. During this time a notice of borrower’s rights will arrive.

An itemized list of the following must be in the hands of the borrower at least one day before closing: Actual fees, points, interests, costs, additional charges.

Once the loan is signed, the borrower is allowed three more days to ponder his decision. If he changes his mind and cancels the loan within the three day period, no penalties or charges may be inflicted on the borrower.

If a borrower defaults on his loan the lender cannot execute a private foreclosure. All home mortgage foreclosures must be court ordered. Although the borrower may lose his home, the lender cannot sue for money.

Texas real estate laws are complex and the points made above are brief overviews of some of the most important aspects of Texas real estate law. The more knowledge you acquire before securing a loan of any kind, the higher the probability of making the right decision for you. It’s always wise to ask questions of the lender, but if you’re not satisfied that you completely understand the regulations regarding mortgage loans; seek the counsel of an attorney who can guide you through the maze. (don)
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