General Mortgage Knowledge · 20% of the SAFE exameasy
Correct answer: A revolving line of credit secured by the borrower's residence
A HELOC is a revolving loan — similar in structure to a credit card — that uses the borrower's home as collateral. Unlike a closed-end installment loan ("s residence", the borrower can draw, repay, and re-borrow during the draw period. It is secured by the residence, making "An unsecured personal line of credit based solely on..." incorrect. HELOCs typically carry variable rates tied to an index such as prime rate, not fixed rates, making "A fixed-rate second mortgage with equal monthly paym..." incorrect.
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