3) Which of the following statements is true concerning home equity loans?
A. Home equity loans are generally installment loans with a 5-15 year term.
B. Home equity loan interest is never tax-deductible.
C. Home equity loans are secured by all of the borrower’s assets.
D. Home equity loan proceeds are generally restricted as to purpose
d
To determine which statement is true concerning home equity loans, let's go through each option:
A. Home equity loans are generally installment loans with a 5-15 year term.
To determine if this statement is true, we need to understand what a home equity loan is. A home equity loan is a loan that allows homeowners to borrow against the value of their home. Typically, home equity loans are indeed installment loans with a fixed term ranging from 5 to 15 years. Therefore, statement A is true.
B. Home equity loan interest is never tax-deductible.
To determine if this statement is true, we need to examine the tax regulations. In some cases, home equity loan interest may be tax-deductible, but this depends on a few factors such as the purpose of the loan funds (using it for home improvements, for example) and the borrower's specific tax situation. Therefore, statement B is false.
C. Home equity loans are secured by all of the borrower’s assets.
To determine if this statement is true, we need to understand the concept of collateral. A home equity loan is secured by the value of the borrower's home, which means the borrower's home serves as collateral. The loan is not secured by all of the borrower's assets but only by their home. Therefore, statement C is false.
D. Home equity loan proceeds are generally restricted as to purpose.
To determine if this statement is true, we need to consider the nature of home equity loans. Generally, home equity loan proceeds are not restricted as to purpose. Borrowers can use the funds for various purposes, such as home improvements, debt consolidation, or other expenses. Therefore, statement D is false.
Therefore, the only true statement concerning home equity loans from the given options is A - Home equity loans are generally installment loans with a 5-15 year term.