Which term describes a long-term bank loan for buying real estate?

Which term describes a long-term bank loan for buying real estate?

• A. Bond
• B. Mortgage
• C. Equity Loan
• D. Credit Line

Answer: (A)

The term for a long-term bank loan used to buy real estate is a mortgage. A mortgage is a loan secured by the property being purchased, so the lender has a legal claim (a lien) on the home until the debt is repaid. It’s typically paid back over many years—often 15 to 30—with interest, and the structure is designed specifically for financing real estate acquisitions. This distinguishes it from other terms: a bond is a debt security issued by companies or governments, not a loan to purchase a home; an equity loan uses the homeowner’s existing equity as collateral and is usually a later access to funds rather than the initial home purchase; and a credit line is a flexible borrowing arrangement up to a set limit rather than a fixed, long-term loan tied to purchasing property.

The term for a long-term bank loan used to buy real estate is a mortgage. A mortgage is a loan secured by the property being purchased, so the lender has a legal claim (a lien) on the home until the debt is repaid. It’s typically paid back over many years—often 15 to 30—with interest, and the structure is designed specifically for financing real estate acquisitions. This distinguishes it from other terms: a bond is a debt security issued by companies or governments, not a loan to purchase a home; an equity loan uses the homeowner’s existing equity as collateral and is usually a later access to funds rather than the initial home purchase; and a credit line is a flexible borrowing arrangement up to a set limit rather than a fixed, long-term loan tied to purchasing property.