What is a "mortgage" in the context of real estate?

In the context of real estate, a mortgage is defined as a loan used to purchase real estate that is secured by the property itself. This means that when a borrower takes out a mortgage to buy a home or any other piece of real estate, the property serves as collateral for the loan. If the borrower fails to make the required payments, the lender has the right to take possession of the property through a legal process known as foreclosure.

Understanding this definition is crucial for anyone involved in real estate transactions, as it highlights the relationship between financing and ownership. A mortgage enables individuals to buy property without having to pay the full purchase price upfront. Instead, they repay the loan amount over time, often with interest, making real estate accessible to a broader range of buyers.

In contrast, a rental agreement pertains to the leasing of property rather than ownership, and a document outlining property ownership refers to deeds, which differ from mortgages. Moreover, investing in real estate funds does not directly involve the financing mechanisms typical of mortgages. This distinction underlines the essential role that a mortgage plays in property transactions and financing.