What is the primary purpose of a mortgage?

The primary purpose of a mortgage is to secure a loan for purchasing real estate by using the property as collateral. When a borrower takes out a mortgage, they are effectively borrowing money from a lender to buy a home or other real estate. The property itself becomes the collateral for the loan, meaning if the borrower fails to make the required payments, the lender has the right to take possession of the property through a process called foreclosure. This arrangement allows borrowers to finance the purchase of property over time rather than needing to pay the entire price upfront, making home ownership more accessible.

Other options provided, such as establishing a rental agreement, providing tax benefits, or serving as a financial investment strategy, do not capture the core function of a mortgage. Rental agreements pertain to leasing property rather than financing it. While there can be tax benefits associated with home ownership, these do not define the function of a mortgage itself. Similarly, while some individuals may treat their home as a financial investment, the primary role of a mortgage is strictly to secure the loan needed to purchase the property. Therefore, focusing on the relationship between the loan and property, which constitutes collateral, illustrates why securing a loan is the essential purpose of a mortgage.