What is a Mortgage in real estate terms?

A mortgage in real estate terms is best defined as a legal document that secures a loan with property. This agreement establishes the lender's right to take possession of the property if the borrower fails to repay the loan, creating a security interest in favor of the lender. In practice, when someone takes out a mortgage to purchase a home, they sign this document, which outlines the terms of the loan, including the interest rate, repayment schedule, and the consequences of default. The property serves as collateral for the loan, which provides lenders with assurance and enables borrowers to obtain financing to purchase real estate.

In contrast, the other options do not accurately represent what a mortgage is. An investment strategy pertains to ways individuals or entities can allocate resources to generate returns, while a contractor's agreement for home development focuses on the construction aspect and agreements with builders. A government policy for loan distribution refers to broader initiatives or regulations impacting how loans are provided, rather than specifically defining a mortgage itself.