Finance
A Nebraska homeowner has a home equity line of credit (HELOC). This is a:
AFixed-rate second mortgage
BRevolving line of credit secured by the home's equity✓ Correct
CGovernment-backed loan program
DType of reverse mortgage
Explanation
A HELOC is a revolving line of credit (like a credit card) secured by the property's equity. Borrowers can draw and repay funds during the draw period.
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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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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