2% Fee Cap

Banks charge fees for their services. Underwriting, Processing, Document Preparation, and Origination would all be fees that banks may charge.

Texas prohibits these charges from exceeding 2% of the Loan amount, exclusive of the fees listed on the right in the adjacent columns.

So, on a $500,000 HELOC, a 2% Fee Cap means the bank charges cannot exceed $10,000.

Most notably, discount points do not count in this fee cap. So if you pay 1 discount point to lower your AIO’s margin (from 3.75% to 3.25%), that fee will be excluded from the maximum amount the bank charges you. So while 1 point would cost $5,000, that will be in addition to the rest of the closing costs, irrespective of the 2% limit.