Which loan is commonly used to buy a house?

Which loan is commonly used to buy a house?

• A. Personal loan
• B. Mortgage loan
• C. Auto loan
• D. Student loan

Answer: (B)

This question tests knowing which loan is used to buy a house. A mortgage loan is designed specifically for real estate purchases, with the home itself serving as collateral. Because it’s secured by the property, lenders can offer longer repayment terms and lower interest rates, making it practical for financing something as costly as a house. Monthly payments usually cover principal and interest, and they may include taxes and insurance through an escrow arrangement. Other loans serve different purposes: a personal loan is a general, unsecured loan for various needs; an auto loan is for buying a vehicle; a student loan funds education. So the mortgage loan is the one commonly used to buy a house.

This question tests knowing which loan is used to buy a house. A mortgage loan is designed specifically for real estate purchases, with the home itself serving as collateral. Because it’s secured by the property, lenders can offer longer repayment terms and lower interest rates, making it practical for financing something as costly as a house. Monthly payments usually cover principal and interest, and they may include taxes and insurance through an escrow arrangement. Other loans serve different purposes: a personal loan is a general, unsecured loan for various needs; an auto loan is for buying a vehicle; a student loan funds education. So the mortgage loan is the one commonly used to buy a house.