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A mortgage is a type of property loan that buyers can use to purchase or refinance residential real estate. A home equity line of credit, which works similarly to a credit card, is also a type of property loan because the lender secures the line of credit against your house. Some homeowners take out two or three loans on the same home. Businesses use commercial property loans to finance offices, retail stores and apartment complexes.
Construction And Rehabilitation
You can take out a loan to purchase an undeveloped piece of land. Many banks offer so-called "construction-to-permanent" loans. You use some of the loan proceeds to finance the purchase of a piece of land and the remaining proceeds finance the construction of a home on the plot.
The Federal Housing Administration insures loans used to finance the refurbishment of real estate property that has fallen into disrepair. Some local governments offer similar loans to individuals and
businesses to finance the rejuvenation of economically depressed communities.
Businesses often secure loans with equipment and heavy machinery. Banks only write loans against equipment likely to hold its value and do not write loans against computers and similar devices that become obsolete and lose value quickly.
When you buy or refinance a car, you are using personal property as collateral for a loan. Other commonly written property loans include loans used to buy mobile homes, motor boats and other types of recreational vehicles.
The Small Business Administration offers personal property loans to people who have been impacted by disasters such as tornadoes or hurricanes. Typically, the SBA only provides financing for business owners but the personal property loans are available to both businesses and consumers. Unsecured loans of up to $40,000 are available to replace personal property lost in disasters, while home owners can borrow up to $200,000 to restore residential real estate damaged during the disaster.