A line of credit issued against the existing equity in a home is called:
Click on the arrows to vote for the correct answer
A. B. C. D.A
The correct answer is A. Home equity credit line.
A home equity line of credit (HELOC) is a type of revolving credit that is extended to a borrower based on the equity they have built up in their home. Equity is the difference between the current value of the home and the amount of any outstanding mortgage or other liens on the property.
A HELOC works similarly to a credit card, where a borrower can draw upon the available credit line as needed, up to the limit set by the lender. The borrower is only required to make payments on the amount that has been borrowed, and the interest rate on a HELOC is typically variable, meaning that it can fluctuate over time.
HELOCs are typically used for large expenses such as home renovations, education expenses, or medical bills, but can also be used for other purposes such as debt consolidation. Because the loan is secured by the borrower's home, the interest rate on a HELOC is often lower than other types of unsecured credit, making it an attractive option for borrowers who have equity in their homes.
In summary, a line of credit issued against the existing equity in a home is called a home equity credit line or a HELOC.