What is the primary purpose of a mortgage?

The primary purpose of a mortgage is to secure a loan against real property. A mortgage creates a legal agreement between the borrower and the lender, allowing the lender to hold a claim against the real estate until the borrower repays the loan. This agreement ensures that if the borrower fails to meet their repayment obligations, the lender has the right to foreclose on the property to recover the owed amount.

Securing a loan against real property is vital for lenders because it minimizes their risk. The property acts as collateral for the loan, meaning that the lender can take possession of the asset if the borrower defaults. This protection encourages lenders to provide loans without excessive risk, facilitating the process for buyers to purchase homes or invest in other real estate.

Other options described do not accurately capture the essence of what a mortgage fundamentally provides. For instance, providing immediate capital for sellers is not the mortgage's role; rather, it is the borrower who receives the capital. Avoiding property taxes is unrelated to the function of a mortgage, as tax obligations remain regardless of mortgage status. Lastly, facilitating property flips may be a scenario where a mortgage can be utilized, but it does not reflect the primary purpose of a mortgage in its broader application.