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←Frequently asked questions

Question: What does collateral mean on a mortgage loan?

Answer: Collateral is an asset that a lender accepts as security for a loan. In a traditional mortgage, the collateral is the home itself. If you fail to make loan payments to your lender, they have the option to repossess or claim ownership of the collateral—i.e. the property.

More resources

  • What is a closing disclosure?
  • What does a loan processor do?
  • What are qualifying ratios and how do mortgage lenders use them?

Related questions

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  • Question: What is a purchase contract in real estate?
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