What term describes a loan used to purchase real estate?

What term describes a loan used to purchase real estate?

• A. Lease
• B. Credit line
• C. Mortgage
• D. Loan

Answer: (C)

A mortgage is a loan used to purchase real estate. It’s unique because the loan is secured by the property itself, meaning the home serves as collateral. If you don’t repay, the lender can foreclose and take the property. Mortgages are typically paid back over a long period, like 15 to 30 years, with interest, and may include components such as principal, interest, taxes, and insurance in the monthly payment. This distinguishes it from a lease (which is rental with no ownership), a line of credit (a flexible, reusable borrowing option not tied to a specific purchase), and a general loan (which isn’t necessarily tied to real estate or used specifically to buy a home).

A mortgage is a loan used to purchase real estate. It’s unique because the loan is secured by the property itself, meaning the home serves as collateral. If you don’t repay, the lender can foreclose and take the property. Mortgages are typically paid back over a long period, like 15 to 30 years, with interest, and may include components such as principal, interest, taxes, and insurance in the monthly payment. This distinguishes it from a lease (which is rental with no ownership), a line of credit (a flexible, reusable borrowing option not tied to a specific purchase), and a general loan (which isn’t necessarily tied to real estate or used specifically to buy a home).