Florida Real Estate Sales Associate Examination Content OutlineReal Estate FinanceMedium
A lender is preparing a loan for a borrower and needs to ensure that the loan is secured by both the real estate and the personal property within the home, such as appliances and furniture. Which type of mortgage would best suit this requirement?
- APackage mortgage
- BPurchase money mortgage
- COpen-end mortgage
- DBlanket mortgage
Show answer & explanationAnswer & explanation
Correct answer: A. Package mortgage
A package mortgage includes both real and personal property as collateral for the loan, which directly matches the scenario's requirement. Purchase money mortgages are for buying property, blanket mortgages cover multiple parcels of real estate, and open-end mortgages allow for additional borrowing.
Why the other options are wrong
- B. A purchase money mortgage is used by a buyer to finance the purchase of a home, typically from the seller, and generally covers only the real estate.
- C. An open-end mortgage allows borrowers to increase the outstanding loan balance up to a certain amount, but does not specifically include personal property as collateral from the outset.
- D. A blanket mortgage covers more than one parcel of real estate, not personal property within a single home.
Package Mortgage
A type of mortgage that includes both real property (land and buildings) and personal property (furniture, appliances) as collateral.
- Secures both real and personal property.
- Common in furnished homes or vacation properties.
- Increases the total loan amount to cover personal items.
Memory trick: Package holds both home and stuff, blanket covers many lands.