A mortgage is a loan secured by real estate, usually a home.
In a mortgage transaction, the borrower receives money to buy or refinance property and promises to repay it under agreed terms. The property serves as collateral, giving the lender a legal claim if the borrower fails to meet the loan obligations.
Mortgage payments commonly include principal and interest. Depending on the agreement and local practice, they may also include amounts for property taxes, homeowners insurance, or other housing costs. Interest may be fixed for the full term or vary under an adjustable-rate structure.
A mortgage is not the same as a deed or a home-insurance policy. The mortgage represents the security interest securing the debt, while ownership documents and insurance serve different purposes. If default continues, foreclosure may allow the lender to recover the debt by taking and selling the property, subject to local law.