Definition: The mortgage line of credit (LCO) rate refers to a specific interest rate that can be charged on a loan secured by a mortgage. It is calculated based on various factors such as the current market interest rate, the risk profile of the borrower, and other relevant variables. In general, a LCO rate is charged at a higher interest rate than a regular loan. This means that when a borrower defaults on their payment, the lender is able to recover more money from the borrower if they are unable to make the payments in full or on time. The rate of the LCO can be set by the lender and varies depending on the type of loan being secured. The term 'mortgage line of credit' refers to any type of credit that allows a borrower to borrow funds for a specific period, such as a home purchase or medical expenses, with the understanding that the total amount borrowed must be repaid within that time period. This type of credit is typically used by individuals who want to use their existing finances in order to meet certain financial goals without needing to apply for new loans. In summary, the mortgage line of credit rate refers to a specific interest rate charged on a loan secured by a mortgage, while the term 'mortgage line of credit' refers to any type of credit that allows a borrower to borrow funds for a specific period.
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