Mortgage is the legal instrument that pledges a house or other real estate as security reason for repayment of a loan. By giving a guarantee that the loan will be paid back, a mortgage enables a person to buy property without cash on hand. Everyone can buy real estate without having the funds to pay for it outright. The problem occur when the borrower fails to repay the loan. Because the lender may foreclose on the property. When it's happend, the lender will force the sale of the house to recover the amount of the loan.
The two instruments of mortgage lending process is a note and a mortgage. The note specifies the financial terms of a loan agreement. The mortgage contains a legal description of the property that pledges the property as security for the loan. However, the word mortgage refers to both parts of the loan agreement as a whole.
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