Florida Real Estate Sales Associate Examination Content OutlineReal Estate FinanceEasy
A lender is preparing a loan for a borrower and needs to ensure that the loan is secured by both the real property and certain personal property within the home. Which type of mortgage instrument would be used in this situation?
- AReverse Mortgage
- BPackage Mortgage
- COpen-End Mortgage
- DBlanket Mortgage
Show answer & explanationAnswer & explanation
Correct answer: B. Package Mortgage
A package mortgage includes not only the real property but also personal property, such as appliances or furniture, as collateral for the loan. This directly addresses the need to secure both types of property.
Why the other options are wrong
- A. A reverse mortgage allows homeowners to convert home equity into cash, typically for seniors.
- C. An open-end mortgage allows the borrower to increase the principal balance at a later time.
- D. A blanket mortgage covers multiple parcels of real estate, not personal property.
Package Mortgage
A mortgage that covers both real property and personal property, often used in newly built homes where appliances are included.
- Secures real estate and personal property
- Common for furnished homes or new constructions
- Increases the amount of collateral for the loan
Memory trick: Package: A 'package deal' includes everything, even the furniture!