What is a Warehouse Line of Credit used for in the mortgage industry?

A Warehouse Line of Credit is specifically designed to provide revolving credit to mortgage companies, enabling them to fund loans for borrowers. This type of credit facility acts as a short-term financing solution, allowing lenders to obtain the necessary capital to close loans before they sell those loans to investors in the secondary market. By doing so, it helps maintain liquidity for the mortgage company while ensuring that they can meet the immediate funding needs of their clients.

In contrast, the other options do not accurately reflect the purpose of a Warehouse Line of Credit. For instance, providing funds specifically for mortgage payments or paying real estate taxes does not align with the primary function of this credit line. Additionally, securing property titles is typically handled through title insurance and does not involve revolving credit. Therefore, the correct understanding of the Warehouse Line of Credit centers on its use as a financial tool for mortgage companies to efficiently manage their loan funding process.