Which security instrument is primarily used in Rhode Island to secure a real estate loan?
Correct Answer
B) Mortgage
Rhode Island is a lien theory state that primarily uses a mortgage as the security instrument for real estate loans. Under lien theory, the borrower retains title to the property while the lender holds a lien against it as security for the debt. Deeds of trust are not commonly used in Rhode Island.
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Related Topics & Key Terms
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Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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