A HELOC is a form of an open-end account that may be debited from time to time, under which credit may be extended from time to time and under which the maximum principal amount that may be extended under the account, when added to the aggregated total of the outstanding principal balances of all indebtedness secured by the homestead on the date the extension of credit is established, cannot exceed 80 percent of the fair market value of the homestead on the date the extension of credit is made.

1. (1) At the time the initial or subsequent advance is made, the principal amount of the advance must comply with Section 50(t)(5). The following amounts when added together must be equal to or less than 80 percent of the fair market value:

   1. (A) the amount of the advance;
   2. (B) the amount of the principal balance of the HELOC at the time of the advance; and
   3. (C) the principal balance outstanding of all other debts secured by the homestead on the date of the closing of the HELOC.
2. (2) An advance under Section 50(t)(5) must meet the requirements of Section 50(t)(2).
3. (3) The maximum principal balance of the HELOC that may be outstanding at any time must be determined on the date of closing and will not change through the term of the HELOC.
4. (4) For purposes of calculating the maximum principal balance under Section 50(t)(5), the outstanding principal balance of all other debts secured by the homestead is the principal balance outstanding of all other debts secured by the homestead on the date of the closing of the HELOC.

Source Note:The provisions of this §153.86 adopted to be effective March 11, 2004, 29 TexReg 2306; amended to be effective March 29, 2018, 43 TexReg 1839.