Sarah is purchasing a home in Louisville, Kentucky and is obtaining a conventional loan from First National Bank. The bank requires a security instrument to protect its interest in the property. Which document will Sarah sign to give the bank a lien on her property?
Correct Answer
A) A mortgage naming the bank as mortgagee
In Kentucky, the security instrument used to give a lender a lien on real property is a mortgage. Sarah (the mortgagor) signs a mortgage naming First National Bank as the mortgagee, granting the bank a lien interest in the property while Sarah retains title. This is the standard practice in Kentucky as a mortgage (lien theory) state.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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.
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