What is the primary purpose of a mortgage?

The primary purpose of a mortgage is to secure a loan by using the property as collateral. This means that when a borrower takes out a mortgage, they are pledging the property to the lender as security for the loan. 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. This pledge provides protection for the lender, ensuring that they have a tangible asset to recover their investment should the borrower default.

While providing financial assistance for home purchases is an essential function of a mortgage, it is not the core purpose; rather, it is a result of the mortgage's nature as a loan secured by real estate. Tax benefits can also be associated with homeownership and mortgage interest, but they are not the primary reason for the existence of the mortgage itself. Lastly, a mortgage does not guarantee property insurance; instead, homeowners typically need to purchase separate insurance to protect their investment against specific risks. Thus, the correct answer emphasizes the security aspect of the mortgage arrangement.