During the draw period of a HELOC, what type of payments are borrowers typically required to make?
Correct Answer
B) Interest-only payments on the outstanding balance
During the draw period of a HELOC, borrowers typically make interest-only payments on the outstanding balance they have drawn, not on the full credit limit. This allows for lower payments during the draw period but results in higher payments during the repayment period.
Why This Is the Correct Answer
During the draw period of a HELOC, borrowers typically make interest-only payments on the outstanding balance they have drawn, not on the full credit limit. This allows for lower payments during the draw period but results in higher payments during the repayment period.
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In a county where the conforming loan limit is $766,550, a borrower obtains an $800,000 loan. Six months later, the conforming limit increases to $850,000 due to area median home price changes. The loan classification: