Finance
What is a 'HELOC' (Home Equity Line of Credit) in Delaware?
AA fixed-rate second mortgage paid in a lump sum
BA revolving line of credit secured by home equity, allowing the borrower to draw funds as needed up to a credit limit✓ Correct
CA home equity loan managed by the government
DA construction loan drawn down in phases
Explanation
A HELOC is a revolving credit line secured by the homeowner's equity. The borrower can draw funds up to a credit limit during the draw period, repay, and redraw — similar to a credit card secured by real estate.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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