How Prop 2 Helps Texas Homeowners Like You

Texas does things a little different than most states, especially when it comes to private-property rights.

For example, we have strict consumer protections related to home equity lending which are so important to Texans that voters actually enshrined them in the state constitution back in 1997.

Much has changed in the housing market in the past 20 years, and now it’s time for our rules to catch up. Proposition 2 on the November ballot is our chance to make this change.

Prop 2 will help Texas homeowners like you in several ways.

Prop 2 will make smaller loans available to more Texans. Right now, there’s a 3% limit on fees that can be charged to create a home equity loan. That means if you’re looking to get a home equity loan of $10,000, you can only be charged up to $300 for all the fees associated with the loan.

But loan fees can add up fast, so lenders aren’t always able to make these kinds of loans for relatively low amounts.

Prop 2 would actually lower that fee limit from 3% to 2%; and take three expenses—the appraisal, title insurance premium, and survey—out of the equation, allowing a borrower to pay for them separately. This means smaller home equity loans will be more readily accessible for Texans.

Prop 2 also makes several other small changes that will make it easier for homeowners to access their hard-earned home equity. But there’s also one important thing Prop 2 doesn’t do.

Remember those strong protections mentioned earlier? Texas prohibits borrowing more than 80% of your home’s value. This means 20% of your home’s equity will always be protected. Other states will let homeowners borrow 100% (or even more) of their home’s equity, putting their homes at risk when the market changes.

Nothing in Prop 2 changes the constitutional protections Texans have when borrowing on their home equity.

You may not need to tap into your home’s equity right now. But what about when your child goes to college, if you want to renovate your home, or if you have an unexpected expense, like medical bills? These are all common reasons Texans take out home equity loans.

You may never need or want to take out a home equity loan, but don’t you want the peace of mind to know that you could if you needed to?

Early voting is Oct. 23-Nov. 3, and Election Day is Nov. 7. Visit your county’s elections website to find polling places. For Tarrant County voters, this is: www.tarrantcounty.com/elections.

Whether you vote early or on Election Day, vote for Proposition 2. You work hard to build up the equity in your home. You should be able to access it when you need it.

About The Greater Fort Worth Association of REALTORS®

The Greater Fort Worth Association of REALTORS® was established in 1918 and has spent a century representing the real estate industry in the Greater Fort Worth area. With over 3,200 REALTOR® and affiliate members, GFWAR is a strong advocate for real estate professionals and private property owners. For more information, visit www.gfwar.org.

This story was originally published October 29, 2017 at 12:00 AM with the headline "How Prop 2 Helps Texas Homeowners Like You."