property. Unlike a home equity loan, HELOCs usually have adjustable interest rates. For most HELOCs, you will receive special checks or a credit card, and you can borrow money for a specified time from when you open your account. This time period is known as the “draw period.” During the “draw period,” you can borrow money, and you must make minimum payments. When the “draw period” ends, you will no longer be able to borrow money from your line of credit. After the “draw period” ends you may be required to pay off your balance all at once or you may be allowed to repay over a certain period of time. Homeowners’ Association (HOA) A homeowners’ association (HOA) is typically formed to manage shared expenses such as landscaping and other maintenance costs for a planned subdivision or other organized community. Condominium HOAs take on the responsibility for items such the maintenance of public space, driveways, shared structures, and roofs. Homeowner's Insurance Lenders require homeowners' insurance (also known as Hazard Insurance) so that the property they have an investment in is fully covered against catastrophic damage. Hazard Insurance is the portion of Homeowner's Insurance directly supporting the structure, not liabilities or contents. This is to ensure that the property they have an investment in is fully covered against catastrophic damage. The lender also wants to make sure that, as the borrower, you’re financially capable of paying down the mortgage in the event that the home is destroyed. Lenders generally require proof of homeowner’s insurance before clearing your file to close. Initial Adjustment Cap An initial adjustment cap is typically associated with adjustable rate mortgages (ARMs). This cap determines how much the
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