FinanceIntermediateDelaware Exam

What is a 'Home Equity Loan' (HEL) versus a HELOC in Delaware?

AA HEL is revolving credit; a HELOC is a lump-sum loan

BA HEL is a fixed-amount, fixed-rate second mortgage paid in a lump sum; a HELOC is a revolving credit lineCorrect

CBoth have identical terms; the names are used interchangeably

DA HEL is for commercial properties; a HELOC is for residential

Why A HEL is a fixed-amount, fixed-rate second mortgage paid in a lump sum; a HELOC is a revolving credit line Is Correct

Answer B: A HEL is a fixed-amount, fixed-rate second mortgage paid in a lump sum; a HELOC is a revolving credit line

A Home Equity Loan (second mortgage) provides a fixed lump sum at a fixed interest rate, repaid in fixed monthly installments. A HELOC is a revolving credit line the borrower can draw from as needed, typically at a variable interest rate.

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.

People Also Study

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.

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 Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Math Concepts

Interest Rate Equity Calculation

Study This Topic

Real Estate Finance Guide

Practice More Delaware Real Estate Questions

1,500+ questions covering all exam topics. Start free — no signup required.

Take the Free Delaware Quiz →