Finance
A Montana homeowner wants to borrow against the equity in their home using a 'home equity line of credit' (HELOC). This differs from a home equity loan in that a HELOC:
AProvides a fixed lump sum disbursed at closing
BIs a revolving credit line that the borrower can draw from and repay as needed during the draw period✓ Correct
CHas a fixed interest rate for the life of the loan
DDoes not require the home as collateral
Explanation
A HELOC is a revolving line of credit secured by the home, with a draw period (typically 10 years) during which the borrower can draw and repay as needed, followed by a repayment period. A home equity loan is a fixed lump sum with fixed payments.
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