A Bond is an investment option that allows investors to loan money to issuers who will ultimately repay the principal amount plus that of fixed interest that has accrued over a certain period of time. A Bond can be defined as a written and signed ‘promise to pay’ for an amount of money that has been mutually agreed on by a certain date or on fulfillment of specified conditions (documented contracts / loan agreements). Bonds that are related to real estate pay a fixed rate of interest over the life of the real estate investment. In a default situation, bondholders that are linked with real estate investments have a claim to the underlying property that they could sell off to compensate for the default. Mortgage Bonds tend to offer the investor a great deal of protection due to the fact that the principal is secured by a valuable asset. However, mortgage Bonds tend to yield a lower rate of return. Unsecured Bonds are known to carry a greater risk than secured Bonds, as such, they will pay higher yields. Bonds that are backed by real estate can be liquidated. It is typical for a mortgage loan to be designated with titled positions that may include; senior, underlying, first, prior, junior, second and third. These Bonds tend to enjoy the preferred positioning as opposed to the unsecured Bonds. Bonds can be termed as high-grade or safe investments. Individuals need to keep in mind that the value of a Bond can be static. It is imperative to take time and study the different kind of loans and loan options.

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