Which statement best describes a mortgage?

A mortgage is best described as a loan secured by real property, which means that the loan is specifically backed by the value of the property itself. In this arrangement, the borrower receives funds from a lender in order to purchase real estate, and in return, the lender has a secured interest in that property. This security means that if the borrower fails to repay the loan as agreed, the lender has the right to take possession of the property through a legal process known as foreclosure.

Understanding mortgages is fundamental to real estate transactions, as this type of financing allows individuals and investors to acquire properties without needing the full purchase price upfront. This practice is a key component of real estate markets, enabling greater home ownership and investment in property.

The other options describe concepts that do not relate directly to the nature of a mortgage. For instance, a lease agreement involves the rental of property, property tax refers to government assessments on property value, and investment strategies vary widely and can include many aspects of real estate but do not define a mortgage.