AIO: Texas Edition

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.

A table comparing examples of borrower-paid fees included and excluded from a 2% fee limit in a real estate transaction. The left column lists fees included, such as administrative, appraisal, and mortgage insurance fees. The right column lists fees excluded, like appraisals performed by third parties, taxes, insurance premiums, and legal fees.