Home Equity Loan on duplex in Austin Texas

[Eric Guiltinan]

Hi BP,

This question goes out to all the Texas mortgage brokers and bankers out there. I have a duplex in Austin Texas that I would like to leverage for the purchase of another property. I lived in the duplex for one year after purchasing. I'd prefer to do a home equity loan instead of a refinance so that I do not have to give up my owner occupant rate. I understand that Article XVI, Section 50 of the Texas constitution forbids home equity loans on non owner occupied properties (only homesteads are allowed). If I were to move back into one side of the duplex could I take out a home equity loan? If so, would the appropriate LTV be 85%, 80%, or 75%? I believe my current LTV to be about 59%.

I've read that there are some issues with getting a home equity loan on a property that is generating rent.  Something about "additional collateral" which I don't fully understand.  I homesteaded the property when I lived in it and at the time TCAD wanted to know the square footage of each side.  I believe I technically only homesteaded 50% of the property.  At least I definitely only got 50% of the homestead tax exemption.