Finance
Texas law regulates 'prepayment penalties' on home loans. For home equity loans under Texas Constitution Article XVI, prepayment penalties are:
ALimited to 5% of the loan balance
BProhibited on Texas homestead home equity loans✓ Correct
CRequired to be disclosed but permitted in any amount
DPermitted only during the first 5 years
Explanation
Texas Constitution Article XVI § 50(a)(6)(G) prohibits prepayment penalties on home equity loans secured by homestead property. This is one of the strong consumer protections built into Texas's home equity lending framework.
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