A mortgage loan that has a predetermined maximum loan amount and can be paid off as needed is known as?

A mortgage loan that has a predetermined maximum loan amount and can be paid off as needed is referred to as a Home Equity Line of Credit (HELOC). This type of loan allows homeowners to borrow against the equity they have built in their property, giving them access to funds as needed up to a specified limit. Borrowers can draw from the line of credit, repay it, and borrow again throughout the draw period, which typically lasts several years.

The flexibility in repayment is a key feature of a HELOC; borrowers are usually only required to pay interest on the amount they draw, making it a convenient option for managing expenses, home improvements, or other financial needs. The predetermined maximum loan amount ensures that the borrower does not exceed a set borrowing limit, which is determined based on the equity in their home.

Other types of mortgage options mentioned may have different structures and repayment terms that do not focus on the revolving access to borrowed funds or may not be based on the homeowner's equity. For instance, an installment second mortgage typically involves fixed payments over a set term and would not allow for the same flexibility as a HELOC. A reverse mortgage targets older adults and provides them with income by converting home equity into loan proceeds without requiring monthly payments, while a