Definition
A security interest is a legal right given to a lender that allows them to take and sell a property if the borrower fails to repay the loan. This is what makes a mortgage a secured loan.
Understanding Security Interest
A lender uses security interest to secure the loan with the property as collateral. The lender has a legal claim on the home if the borrower doesn't repay the loan. In simple terms, security interest gives the lender a safety net. Example: If someone borrows $200,000 to buy a house, the home serves as the security for that loan. It's not about the lender owning your home; rather, it ensures the lender can recover the owed money if necessary. Security interest is a common part of mortgages that allows borrowers to access funds while protecting the lender.
