Which term best describes a loan used to purchase real estate?

Which term best describes a loan used to purchase real estate?

• A. Deed loan
• B. Home loan
• C. Real estate loan
• D. Mortgage

Answer: (D)

A mortgage is a loan secured by real estate that’s used to purchase property. When you buy a home, you typically borrow money from a lender and pledge the property as security. The lender holds a lien on the property, which means they have a legal claim to the property if you don’t repay. If payments aren’t made, the lender can pursue foreclosure to recover the loaned amount. Other terms aren’t as precise. A deed is the document that transfers ownership, not the loan itself. A home loan is a common everyday way to describe borrowing for housing, but the more exact financial term for the loan tied to property is mortgage. Real estate loan is technically accurate but not the standard, widely used term you’ll hear in finance and real estate. So, mortgage best describes a loan used to purchase real estate.

A mortgage is a loan secured by real estate that’s used to purchase property. When you buy a home, you typically borrow money from a lender and pledge the property as security. The lender holds a lien on the property, which means they have a legal claim to the property if you don’t repay. If payments aren’t made, the lender can pursue foreclosure to recover the loaned amount.

Other terms aren’t as precise. A deed is the document that transfers ownership, not the loan itself. A home loan is a common everyday way to describe borrowing for housing, but the more exact financial term for the loan tied to property is mortgage. Real estate loan is technically accurate but not the standard, widely used term you’ll hear in finance and real estate. So, mortgage best describes a loan used to purchase real estate.