Finance
A Wisconsin home equity line of credit (HELOC) is secured by:
AThe borrower's car and personal property
BA second mortgage on the borrower's home✓ Correct
CU.S. Treasury bonds owned by the borrower
DThe lender's deposit insurance
Explanation
A HELOC is secured by a mortgage (typically a second mortgage or subordinate lien) on the borrower's home. The home serves as collateral for the revolving credit line.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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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