How is a loan term defined in real estate?

In real estate, a loan term refers to the total duration of the loan repayment period. It defines how long a borrower has to repay the full amount of the loan, along with any interest, and is typically expressed in years, such as 15, 20, or 30 years. This period is crucial as it affects the monthly payment amounts and the total interest paid over the life of the loan. Understanding the loan term helps borrowers assess their financial commitments and plan their repayment strategy effectively.

The other choices highlight different aspects of a loan. The annual percentage rate pertains to the cost of borrowing expressed as a percentage and does not define the term itself. The amount borrowed refers to the principal of the loan, and the legal documents required to enforce the loan concern the contractual agreement and security for the lender but do not relate to the duration of repayment.