What is a mortgage?

A mortgage is fundamentally understood as a long-term loan specifically designed for purchasing real estate, such as a home or a piece of property. This type of loan involves the lender providing funds to the borrower, who then agrees to repay the principal amount along with interest over an extended period, typically ranging from 15 to 30 years. The property itself serves as collateral, meaning if the borrower fails to make the required payments, the lender has the right to take possession of the property through a legal process known as foreclosure.

In contrast, other options describe financial products that do not accurately fit the definition of a mortgage. For example, a short-term loan for furniture pertains to consumer credit rather than real estate, while a personal loan secured by a credit score refers to unsecured loans based purely on an individual's creditworthiness without specific collateral tied to real estate. Lastly, investments in stocks and bonds are entirely different from mortgages, as they pertain to equity and debt securities rather than loans for purchasing property. Thus, the focus on long-term financing for real estate clearly underlines why a mortgage is correctly identified as a long-term loan for buying real estate.