What is a loan secured by the property of the borrower called?

A loan secured by the property of the borrower is called a mortgage. This type of loan involves the borrower pledging real estate, typically a home, as collateral for the loan. If the borrower fails to make the necessary payments, the lender has the legal right to take possession of the property through a process known as foreclosure.

Mortgages are essential in the real estate industry because they enable individuals to purchase homes without needing to pay the total price upfront. The interest rate on a mortgage is often lower than that of unsecured loans because the loan is backed by the value of the property, which reduces the lender's risk.

In contrast, a promissory note is simply a written promise to pay a specified amount of money to someone, and it does not involve collateral. A line of credit refers to a flexible loan arrangement allowing the borrower to draw funds up to a certain limit but is typically unsecured. An equity loan, while related to property and often involves borrowing against the equity built up in a home, is not specifically described as a mortgage, which is the standard term used for loans secured by real property. Therefore, the clear identification of a mortgage as a loan backed by property solidifies it as the correct answer.