FinanceIntermediateDelaware Exam

What is a 'home equity line of credit' (HELOC) and how does it work in Delaware?

AA fixed-rate second mortgage providing a lump sum to the homeowner
BA revolving line of credit secured by the homeowner's equity, allowing borrowing up to a credit limit, repayment, and re-borrowing during the draw periodCorrect
CSimply a narrow government program available only to Delaware homeowners specifically to fund energy efficiency improvements, according to common practice
DA mortgage product available only to first-time homebuyers in Delaware

Why A revolving line of credit secured by the homeowner's equity, allowing borrowing up to a credit limit, repayment, and re-borrowing during the draw period Is Correct

Answer B: A revolving line of credit secured by the homeowner's equity, allowing borrowing up to a credit limit, repayment, and re-borrowing during the draw period

A HELOC is a revolving credit line secured by the homeowner's equity. During the draw period (typically 10 years), the borrower can draw, repay, and redraw up to the limit.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

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