Finance
A home equity line of credit (HELOC) is best described as:
AA fixed-rate second mortgage
BA revolving line of credit secured by home equity that can be drawn and repaid✓ Correct
CA government-backed refinance program
DInsurance against loss of equity
Explanation
A HELOC is a revolving credit line secured by the homeowner's equity, allowing the borrower to draw funds up to a limit, repay, and draw again during the draw period.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
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