Excellent question, which can be answered simply by referencing Webster’s definition as follows:
: a legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period of years
However, being the curious being that you are, you surely want to dive in a bit deeper, so let’s take a look at the etymological roots of the word itself…
late 14c., morgage, “conveyance of property as security for a loan or agreement,” from Old French morgage (13c.), mort gaige, literally “dead pledge” (replaced in modern Frech by hypothèque), from mort “dead” (see mortal (adj.)) + gage “pledge” (see wage (n.)). So called because the deal dies either when the debt is paid or when payment fails. Old French mort is from Vulgar Latin *mortus “dead,” from Latin mortuus, past participle of mori “to die” (see mortal (adj.)).
“Dead pledge”?? Hmm… interesting, right? There are other interpretations of the meaning behind the death reference in the etymological roots of the word, and this author is inclined to agree with the alternative.
Anyhoo, let’s run through the trivium method before moving on further, and answer the “5 w’s and how”:
WHO: A borrower and a lender.
WHAT: A contract defining terms to borrow and re-pay money for the purchase of some sort of property, typically a home or other real estate in the modern application. In case of default, the loan is secured by the property so the lender has the right to repossess (foreclose) and thus avoid losses.
WHERE: Abstract. Contracts are agreements recorded (typically at the county or other government office) on paper, and a mortgage is a type of a contract.
WHEN: When someone does not have cash (or wish to use cash) or other means to purchase property, and instead agrees to borrow and repay a lender.
WHY: See the entry for “WHEN”.
HOW: A whole bunch of paperwork. There are few in the USA and other parts of the developed world who own property outright these days, so a mortgage is typical. Applying for a loan with a bank or mortgage broker is how the process gets started, and then a series of papers are signed and proof of income, savings, down payment, family dog, etc are typically requested by the lender.