What Is a Mortgage?
By JC Pacific Corp Published 2026-09-01 Last professionally reviewed: September 2026
A mortgage is a loan secured by real property. The borrower agrees to repay the money under specified terms, and the lender receives a security interest in the property.
What Does the Borrower Repay?
Mortgage payments may include:
- Principal
- Interest
- Property taxes
- Homeowners insurance
- Mortgage insurance
- Other amounts collected through an escrow or impound account.
HOA dues are usually a separate expense, even though lenders consider them when evaluating affordability.
What Is Principal?
Principal is the loan amount being repaid. Early payments on many amortizing mortgages include more interest and less principal than later payments.
What Is Interest?
Interest is the cost of borrowing money. The interest rate, loan balance and repayment term affect the amount paid.
What Happens if the Borrower Does Not Pay?
Because the loan is secured by the property, serious default can ultimately lead to foreclosure, subject to the loan documents and applicable law.
Frequently Asked Questions
Is a mortgage the same as the purchase price?
No. The purchase price includes the buyer's cash contribution and borrowed funds.
Does paying off the mortgage mean I own the home?
The homeowner owns the property subject to the mortgage and other obligations. Paying off the loan removes that lender's security interest once properly released.
Are property taxes included automatically?
Not always. Ask whether the loan requires an escrow or impound account.
Compare the loan's payment, upfront costs, long-term interest and property expenses, not merely the advertised interest rate.
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JC Pacific Corp is an Irvine-based Southern California brokerage helping buyers navigate offers, escrow, and financing. Tell us what you are looking for and we will point you to current options across the region.
A note on legal advice: These guides provide general, educational information about California real estate practice. They are not legal advice and do not create an attorney-client relationship. Mortgage information is general education, not individualized lending, tax or legal guidance. For advice about your specific offer, contract, closing or financing, consult a qualified California real estate attorney and a qualified mortgage professional.