Laws

• Second mortgage holders must take extra steps in Texas to foreclose on a home.law courts image by Peter Helin from Fotolia.com
  
  Texas states that when home equity loans are taken out as second mortgages on a home, the fees cannot exceed 3 percent of the loan amount. Home equity lines of credit and second mortgages cannot exceed 50 percent of the current market value of the home. Texas limits the amount of second mortgages so the first and second mortgages combined cannot equal more than 80 percent of the home's value.
  
  

Limits

• Texas does not permit second mortgages as a line of credit for a business. Second mortgages can be used for renovations, new construction, college expenses or to buy additional properties.
  
  

Prioritization

• Texas law classifies second mortgages as second lien mortgages. The second mortgage has a lower priority to the first mortgage if the home is sold or foreclosed upon. Senior mortgage holders can chose to become lower priority, making the first mortgage classified as a second mortgage. If the first mortgage is paid off, the second mortgage becomes the senior mortgage.