Final answer:
A borrower using property as security for a loan is acquiring a secured loan, where the property is collateral. If not repaid, the bank can sell the property. Banks also conduct credit checks and may require a cosigner for loan approval.
Step-by-step explanation:
An individual or institution that borrows money to purchase real estate, pledging the property as security for the loan, is taking out a secured loan.
This means that the property serves as collateral, providing the lender with a form of security. If the borrower fails to repay the loan, the bank or financial institution has the right to take possession of the property and sell it to recover their losses.
Prior to granting a loan, banks often require a credit check, details on income sources, or even a cosigner who agrees to take on the debt if the initial borrower defaults.