What is a mortgage?

A mortgage is best defined as a loan secured by real estate. This financial instrument enables a borrower to obtain funds from a lender to purchase or refinance a property, with the property itself serving as collateral for the loan. This means that if the borrower defaults on the loan, the lender has the right to take possession of the property through a legal process known as foreclosure.

The structure of a mortgage involves two main parties: the borrower, who receives the loan, and the lender, who provides the funds. The terms of the mortgage specify the amount borrowed, the interest rate, and the repayment schedule. It's important to note that mortgages are essential to real estate transactions, as they allow individuals and businesses to acquire property without needing the full purchase price upfront.

In contrast, the other options do not accurately represent what a mortgage is. A lease document pertains to renting property, which involves an agreement between a landlord and tenant for temporary use of a property. A warranty deed is a legal document used to transfer ownership of property from one party to another, ensuring that the title is clear of any encumbrances. Lastly, a legal description outlines the precise boundaries and location of a piece of real estate, often used in deeds or surveys, but it does not describe a