What is the outcome of a borrower retaining ownership during a loan period under lien theory?

In lien theory states, the borrower retains ownership of the property even while financing it through a loan. This means that the borrower is able to gain equity in the property as they make payments towards the mortgage. Equity is the difference between the property’s market value and the amount still owed on the mortgage. As the borrower pays down the principal on their loan, they increase their ownership stake or equity in the property.

In fact, maintaining ownership allows the borrower to benefit from any appreciation of the property’s value over time, further contributing to their equity. This retention of ownership is a fundamental aspect of lien theory, contrasting with title theory states where the lender holds the title until the mortgage is paid off. Thus, option B accurately reflects the borrower’s ability to build equity while maintaining ownership during the loan period.