What Is a CD in a Mortgage?

A certificate of deposit, or CD, is a type of savings account in which a depositor agrees to keep money in the account for a set period of time, typically six months to five years. The longer the term, the higher the interest rate the depositor can earn. 

A certificate of deposit can be used as collateral for a loan, such as a mortgage. When a CD is used as collateral, the lender holds the CD as security in case the borrower defaults on the loan. If the borrower does not default, the …