Answer:
C. the purchased property that secures the loan
Step-by-step explanation:
Mortgage collateral describe the use of a property e.g house to secure a loan. This collateral is always requested when a large amount of money is involved. The house could be sold if the borrower renege (fail to meet up with) on the due date as regards the agreement after collecting the loan.
Therefore, a mortgage collateral could be referred to as the purchased property that has been used to secure a loan by a borrower.
Therefore the purchased property that secures the loan is the correct answer.
Collateral refers to an asset that a borrower offers as a guarantee for a loan, such as a mortgage.
When you obtain the loan, the lender puts a lien on the collateral. The lien stipulates that the lender can seize the collateral if you don’t repay the loan under the terms of the contract.
Once you repay the loan, the lender removes the lien and no longer has a claim to the collateral.
In the case of a mortgage, the collateral is the real property.
When determining whether to approve your loan, the lender will ensure that the property ,the collateral ,is actually worth what you propose to pay for it with the loan.
If it isn’t, the lender can deny the mortgage because the asset isn’t worth the risk.
Therefore the purchased property that secures the loan is the correct answer.
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