What is a mortgage?

A mortgage is essentially a loan that is specifically obtained to purchase real estate. When someone takes out a mortgage, they are borrowing money from a lender, typically a bank or a mortgage company, to buy a home or other real property. The property itself serves as collateral for the loan, meaning that if the borrower fails to make the required payments, the lender has the right to take possession of the property through foreclosure.

This is distinct from other options such as a lease agreement, which pertains to renting rather than purchasing property, and would not involve taking on debt to own an asset. Insurance for homeowners, while important, has a different purpose as it provides financial protection for the homeowner rather than being a means to finance the acquisition of a property. Lastly, the process of selling property involves transferring ownership and is a separate action from obtaining financing to buy property. Therefore, the correct understanding of a mortgage is as a loan designed for the purchase of real estate, which aligns perfectly with the given answer.