California Real Estate Practice Exam

Which type of lender is known for offering long-term real estate loans, often up to 30 years?

1. Banks

2. Credit unions

3. Insurance companies

4. Savings banks

The correct answer is: Banks

The correct choice is banks because they are typically the primary institutions offering long-term real estate loans, commonly with terms that can extend up to 30 years. This long-term lending capability is essential for financing major purchases like homes, providing borrowers the ability to spread their repayments over an extended period, which results in lower monthly payments compared to shorter-term loans. Banks often provide a wide range of mortgage products, including fixed-rate mortgages and adjustable-rate mortgages, making them a popular choice for homebuyers. They have the resources and regulatory framework in place to handle large volumes of loan applications and to offer competitive interest rates based on market conditions. While credit unions, insurance companies, and savings banks also offer real estate loans, banks tend to dominate the long-term market due to their scale, capital resources, and extensive mortgage product offerings. This distinction underscores why banks are recognized as a reliable and prevalent option for long-term real estate financing.