Question

All of the following are true of a home equity loan except it:

A) provides you with a line of credit or a lump sum of money, depending on the type of loan.
B) is a good way to combine different kinds of debt.
C) may be tax deductible.
D) allows you to borrow up to 20% of the market value of your home.

Answer 1

A home equity loan provides homeowners with a line of credit or a lump sum of money, and it is a good way to consolidate different kinds of debt. The tax deductibility of a home equity loan depends on the purpose of the loan. There is no specific limit to how much you can borrow with a home equity loan, but lenders typically allow borrowers to borrow up to a certain percentage of the market value of their home.

Step-by-step explanation:

A home equity loan is a type of loan that allows homeowners to borrow money using their home's equity as collateral. It provides the borrower with a line of credit or a lump sum of money, depending on the type of loan.

Home equity loans are a good way to consolidate different kinds of debt, as they generally have lower interest rates compared to other types of loans. However, they may not be tax deductible in some cases, as the tax deductibility depends on the purpose of the loan.

While home equity loans allow you to borrow against the equity in your home, there is no specific limit as to how much you can borrow. However, lenders typically allow borrowers to borrow up to a certain percentage of the market value of their home, which is usually around 80%.