Finance
What is a 'home equity line of credit' (HELOC) in Rhode Island?
AA fixed-rate second mortgage
BA revolving line of credit secured by the equity in the borrower's home, allowing draws and repayments up to a credit limit✓ Correct
CA government assistance program for home repairs
DA mortgage product only available to seniors
Explanation
A HELOC is a revolving line of credit secured by the borrower's home equity. Borrowers can draw on the line, repay it, and draw again up to the credit limit.
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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.
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.
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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