Final answer:
The mortgage described by the student is known as an open-end loan, which allows borrowers to take out additional funds secured by their home. This is different from an adjustable-rate mortgage (ARM), which has a varying interest rate but does not inherently allow additional borrowing.
Step-by-step explanation:
The type of mortgage described in the student's question is a mortgage that allows borrowers to borrow additional funds that are secured by their home at any given time. This kind of mortgage is known as an open-end loan, which is an option that gives homeowners the flexibility to borrow more money in the future, using their home as collateral for the loan.
An adjustable-rate mortgage (ARM) is slightly different; it refers to a home loan with an interest rate that can vary over time depending on market interest rates. However, this doesn't necessarily indicate the ability to borrow additional funds beyond the original mortgage amount. In contrast, a closed-end loan would be a mortgage that doesn't allow for additional borrowing once the loan has been made, which is not what is described in the scenario given by the student.