The borrower may request advances, repay money, and reborrow money under a home equity line of credit.
Minimum Advance. Each advance under the line of credit must be in an amount of at least $4,000.
Advance Mechanism. The borrower may not use a credit card, debit card, solicitation check, or similar device to obtain advances under the line of credit.
Fee Limits. Any fees the Bank charges may be charged and collected only at the time the line of credit is established and the Bank may not charge a fee in connection with any advance.
Advance Limits. For loans originated on or after January 1, 2018, the maximum principal amount that may be extended, when added to all other debts secured by the homestead, may not exceed 80 percent of the fair market value of the homestead on the date the line of credit is established as established in the Acknowledgement as to Fair Market Value.
EXAMPLE: Value of home is $200,000. The HELOC is $160,000. The Owner can draw on the line so long as principal never exceeds $160,000.
For loans originated before January 1, 2018, if the principal balance under the line of credit at any time exceeds 50 percent of the fair market value of the homestead, as determined on the date the line of credit is established, the borrower may not continue to request advances under the line of credit until the balance is less than 50 percent of the fair market value. The 2018 Amendment eliminated the 50% cap.
No Unilateral Amendment. The Bank may not unilaterally amend the terms of the line of credit.
Judicial Foreclosure. If the borrower defaults, the Bank must file suit and obtain a judgment ordering foreclosure of the lien securing the equity loan.
Documentation. A sample deed of trust for a home equity line of credit which contains a future advance clause, Texas Deed of Trust-Home Equity Line of Credit is located at the end of this Chapter, together with a Texas Home Equity Terms and Conditions for a HELOC.