A mortgage is a type of loan specifically used to purchase real estate, typically a home or a piece of property. It involves borrowing money from a lender, such as a bank or a mortgage company.

The key components of a mortgage include:

Interest: Lenders charge interest on the loan, which is the cost of borrowing the money. Interest rates can be fixed (stay the same throughout the loan term) or adjustable (fluctuate according to market conditions.

Monthly Payments: Borrowers are typically required to make monthly payments to repay the loan. These payments usually consist of both principal and interest, with additional amounts sometimes included for property taxes and homeowners insurance. This combined payment is often referred to as the PITI (Principal, Interest, Taxes, and Insurance.

Collateral: The property being purchased serves as collateral for the loan. This means that if the borrower fails to repay the loan as agreed, the lender has the right to seize the property through a process called foreclosure.