A mortgage is best described as which of the following?

A mortgage is best described as which of the following?

• A. A loan secured by the borrower's assets
• B. A loan secured with the creditor's claim on the property of the borrower
• C. An unsecured line of credit
• D. A government grant

Answer: (B)

A mortgage is fundamentally a loan backed by real estate. The lender places a lien on the property, giving them a legal claim to the home if the borrower defaults. The borrower still owns the property and repays principal and interest over time, with the property serving as collateral. This is why the description that it's a loan secured with the creditor's claim on the borrower's property is the best fit. An option describing it as secured by the borrower's assets in general isn’t as precise, since the mortgage relies specifically on the real estate. An unsecured line of credit has no collateral, which isn’t correct for a mortgage. A government grant isn’t a loan that must be repaid.

A mortgage is fundamentally a loan backed by real estate. The lender places a lien on the property, giving them a legal claim to the home if the borrower defaults. The borrower still owns the property and repays principal and interest over time, with the property serving as collateral. This is why the description that it's a loan secured with the creditor's claim on the borrower's property is the best fit. An option describing it as secured by the borrower's assets in general isn’t as precise, since the mortgage relies specifically on the real estate. An unsecured line of credit has no collateral, which isn’t correct for a mortgage. A government grant isn’t a loan that must be repaid.