Which security instrument is used in Kentucky to pledge real property as collateral for a mortgage loan?
Correct Answer
D) Mortgage
Kentucky is a mortgage state. When a borrower pledges real property as collateral for a loan, the security instrument used is a mortgage. The borrower (mortgagor) conveys a lien on the property to the lender (mortgagee) while retaining title. This is governed by Kentucky's general lien theory and KRS Chapter 382.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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