Mortgage Loan Originator (MLO) Licensing Practice Test 2025 – Your All-in-One Guide to Exam Success!

Question: 1 / 605

Do Home Equity Lines of Credit (HELOCs) require monthly payments?

Yes, always

No, never

Home Equity Lines of Credit (HELOCs) typically do allow for interest-only payments during the draw period, which is the time when you can access the funds. This means that, rather than requiring monthly payments consistently throughout the life of the loan, there's a period where you only pay interest on the amount you've borrowed from your line of credit. This can lead to a situation where there are no required principal payments during the draw period.

Once the draw period ends, the loan transitions into the repayment period, during which principal and interest payments become necessary. Thus, the structure of HELOCs does not necessitate monthly payments at all times, making the assertion that they "never" require monthly payments misleading since it simplifies a more nuanced repayment structure into an absolute statement.

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Only during the draw period

Only during the repayment period

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