Business and Personal Finance Dictionary

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• MORTGAGE BOND, LOAN, OR NOTE
  
  A Bond, Loan, or Note plus a security interest in a piece of property, commonly real property (land and/or buildings). A residential mortgage loan typically contains a prepayment option, which is the borrower's call option on the loan and which becomes valuable when interest rates decline. Also, in practice, the lender sells the homeowner a put option on the pledged home, struck at the loan's balance.
  
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