Hawaii Pre-Licensing National Practice Exam 2025 – Your Complete Prep Guide

A mortgage lien serves as a legal claim against a property that is pledged as collateral to secure a loan. This means that when a borrower takes out a mortgage, they are providing the lender with a claim against their property until the loan is paid off. If the borrower fails to repay the loan, the lender has the right to foreclose on the property, which allows them to recover the owed amount by selling the property.

In contrast, the other options do not accurately describe what a mortgage lien is. An agreement to purchase a property pertains to a purchase contract, which involves the buyer and seller agreeing on the terms of a real estate transaction but does not involve the security of a loan. A payment plan for mortgage loans relates to the schedule and structure of loan repayments, not the security interest itself. Lastly, property insurance protects against damage to a property and does not provide any lien or legal claim involved in securing a mortgage loan. Thus, the correct understanding of a mortgage lien is crucial for navigating real estate financing.