What type of loan is secured by real property?

What type of loan is secured by real property?

• A. Personal Loan
• B. Home Equity Loan
• C. Mortgage
• D. Lines of Credit

Answer: (C)

A loan secured by real property is commonly known as a mortgage. This type of loan involves an agreement where the borrower receives funds to purchase real estate, and in return, the lender has a legal claim against the property. This claim ensures that if the borrower defaults on the loan, the lender can foreclose on the property to recover the owed amount. Mortgages are specifically designed for the purchase of real estate, providing a secure interest for lenders since the property itself serves as collateral. This security generally allows borrowers to obtain lower interest rates compared to unsecured loans, as the lender's risk is reduced. While home equity loans also involve real property, they are typically subordinate to a first mortgage and are secured against the equity that has built up in a home, rather than the purchase of the property itself. Personal loans and lines of credit, however, do not have specific backing of real property; they are considered unsecured, meaning the lender does not have the right to claim any specific assets as collateral if the borrower defaults.

A loan secured by real property is commonly known as a mortgage. This type of loan involves an agreement where the borrower receives funds to purchase real estate, and in return, the lender has a legal claim against the property. This claim ensures that if the borrower defaults on the loan, the lender can foreclose on the property to recover the owed amount.

Mortgages are specifically designed for the purchase of real estate, providing a secure interest for lenders since the property itself serves as collateral. This security generally allows borrowers to obtain lower interest rates compared to unsecured loans, as the lender's risk is reduced.

While home equity loans also involve real property, they are typically subordinate to a first mortgage and are secured against the equity that has built up in a home, rather than the purchase of the property itself. Personal loans and lines of credit, however, do not have specific backing of real property; they are considered unsecured, meaning the lender does not have the right to claim any specific assets as collateral if the borrower defaults.