What is the purpose of a "mortgage"?

The purpose of a mortgage is fundamentally to serve as a loan that is used specifically to purchase real estate. When a borrower takes out a mortgage, they are borrowing money from a lender to buy a property, with the property itself serving as collateral for the loan. This means that if the borrower fails to repay the loan, the lender has the right to take possession of the property through foreclosure.

Mortgages typically involve a long-term loan agreement, often lasting 15 to 30 years, during which the borrower makes monthly payments that include both principal and interest. The structured nature of mortgages allows individuals to afford homes they might not be able to buy outright, thereby expanding access to real estate ownership.

Other options presented do not accurately reflect the primary function of a mortgage. Insuring the property against damage is the role of homeowner's insurance, while protecting a seller's interests pertains more to the terms of a sales contract than to a mortgage itself. Lastly, facilitating rental agreements is outside the scope of mortgages, which are strictly concerned with the financing of property purchases rather than arrangements for renting.