PSI Oklahoma Real Estate Practice Test

In real estate, what does a blanket mortgage refer to?

1. A mortgage for a single lot

2. A mortgage covering multiple properties

3. A fixed-rate mortgage

4. A mortgage with no collateral

The correct answer is: A mortgage covering multiple properties

A blanket mortgage is a type of loan that covers multiple properties under a single mortgage agreement. This financial instrument is commonly used by developers or investors who own several pieces of real estate and want to finance them together rather than securing separate loans for each property. By using a blanket mortgage, the borrower can benefit from easier management of their loans and, often, more favorable lending terms or rates, since lenders might consider the collective value of the properties when determining risk. Additionally, blanket mortgages often include a release clause, allowing the borrower to sell individual properties without needing to pay off the entire loan upfront, which adds to the flexibility of asset management for the investor. The other options involve concepts that do not align with the definition of a blanket mortgage. For instance, a mortgage for a single lot describes a standard mortgage that applies only to one specific property, while a fixed-rate mortgage pertains to the interest rate stability rather than the number of properties covered by the loan. Lastly, a mortgage with no collateral would not qualify as a typical mortgage arrangement, as collateral is a key component of securing a loan in real estate.