Finance
What is a 'home equity line of credit' (HELOC) and how is it typically used by Pennsylvania homeowners?
AA fixed-rate second mortgage for a specific amount to fund home improvements
BA revolving line of credit secured by the homeowner's equity, allowing draws up to a credit limit for home improvements, debt consolidation, or other purposes✓ Correct
CA government-backed loan program for low-income Pennsylvania homeowners
DA type of reverse mortgage available to Pennsylvania homeowners over 62
Explanation
A HELOC is a revolving credit line secured by home equity — like a credit card backed by the home. Pennsylvania homeowners use HELOCs for home improvements, debt consolidation, education costs, and emergencies. During the draw period (typically 10 years), borrowers can draw up to the credit limit, paying only interest. During the repayment period, the balance is repaid. HELOCs are subordinate to the first mortgage and variable-rate, creating payment risk if rates rise.
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