Which of the following describes a mortgage?

A mortgage is best defined as a loan secured by real property. This definition highlights the fundamental nature of a mortgage, which involves borrowing money to purchase real estate, with the property itself serving as collateral for the loan. In the event that the borrower cannot fulfill the repayment obligations, the lender has the legal right to take possession of the property through foreclosure.

Understanding this definition is essential in real estate as it distinguishes a mortgage from other financial and legal concepts. For example, while a lease involves renting property and does not convey ownership, and a type of insurance deals with protection against loss or damage, these do not describe the nature of a mortgage. Similarly, ownership transfer refers to the process of changing ownership of property, which is separate from the financing arrangement provided by a mortgage. By knowing that a mortgage specifically refers to a loan secured by the value of the real property, it becomes clear how it fits into the overall landscape of real estate transactions and financing.