Finance
A Minnesota homeowner takes out a home equity line of credit (HELOC). A HELOC differs from a home equity loan because:
AA HELOC provides a lump-sum payment; a home equity loan provides a credit line
BA HELOC is a revolving credit line with variable rates; a home equity loan provides a lump sum at a fixed rate✓ Correct
CA HELOC requires more equity than a home equity loan
DA HELOC cannot be used for home improvements
Explanation
A HELOC is a revolving credit line secured by home equity—the borrower can draw, repay, and redraw up to the credit limit, typically with a variable interest rate. A home equity loan (second mortgage) provides a fixed lump sum with a fixed interest rate and regular payments. Both use the home as collateral.
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