Question

When you take out a mortgage your home becomes the collateral true or false?

Answer 1

TRUE

Step-by-step explanation:

A mortgage is a line of credit where you place your property as collateral to the lender to get a loan at a lower interest rate. This is very common in high value loan transactions. If you honor the payment normally, nothing changes with your property, but if you do not honor the payment, you may lose the property through a lawsuit in which the creditor claims the property.

Answer 2

A mortgage is a long term loan issued by a financial institution such as; banks. These are loans obtained for a large sum of finance required. Example; an entrepreneur requires 60 million for expansion of the business. Therefore in such cases, a house is normally worth this amount and thus, a collateral security is given which is the house.