Definition: The term "mortgage" refers to a loan or loan agreement that requires repayment in advance with interest, typically made by the borrower to finance a mortgage payment for an asset (like a house) that must be paid off over time. A line of credit, on the other hand, is a type of secured loan that allows customers to borrow money up to a certain amount but does not require upfront payment or repayment in advance. The borrower agrees to repay the loan after a set period, typically three months, with interest and may have the option to extend the borrowing period if approved by the lender. Both terms are commonly used to describe loans that provide financial support for specific assets, such as homes or businesses. However, they differ in their purpose, structure, and repayment obligations. To summarize: - Mortgage: A loan agreement that requires repayment in advance with interest. - Line of Credit: A secured loan that allows customers to borrow money up to a certain amount but does not require upfront payment or repayment in advance. Both terms are important for understanding the financial support available from loans.
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