What is the purpose of a mortgage?

The purpose of a mortgage is to serve as a security for the payment of a debt. When an individual or entity takes out a mortgage, they are borrowing money from a lender to purchase real estate. The mortgage creates a legal agreement that allows the lender to claim the property if the borrower fails to meet their repayment obligations.

This security interest in the property ensures that the lender has a tangible asset that can be sold to recover the borrowed funds if necessary. By creating a lien on the property, the lender protects their financial interests and mitigates risk associated with lending.

The other options do not accurately describe the function of a mortgage. For example, ownership of property without payment is not a function of a mortgage; rather, a mortgage allows for ownership through financing. Additionally, while mortgages facilitate real estate transactions, they do not specifically involve cash transactions; they primarily function as a credit instrument. Finally, a mortgage does not eliminate liabilities related to property; instead, it establishes a specific obligation to repay the debt, along with all other liabilities that come with property ownership, such as property taxes and maintenance costs.