A mortgage is a device used to create a lien on real estate by contract. It is used as a method by which individuals or businesses can buy residential or commercial property without paying the full value upfront. In legal terms, the creation of a mortgage gives the legal title of the land to the mortgager and an equitable title (called "equity of redemption") to the mortgagor. The legal title, however, only exists as a security for a debt and does not convey any title or powers associated real property.

In Houston, like other states, to protect the lender, a mortgage is recorded in the public records creating a lien (when there are multiple liens, order of recording determines priority). Since mortgage debt is often the largest debt owed by the debtor, banks and other mortgage lenders run title searches of the real property to make certain that the lien of the mortgage is prior to anyone else's claim. Tax liens, in some cases, will come ahead of mortgages. For this reason, if a borrower has delinquent property taxes, the bank will often pay them to prevent the lien holder from foreclosing and wiping out the mortgage.

Something to consider in mortgage lending is the process. In the USA, the process by which a mortgage is secured by a borrower is called origination. This involves the submission of an application and documentation related to the customer's financial history. An underwriter then reviews this information.

Lenders may charge various fees when giving a mortgage to a mortgagor. These include entry fees, exit fees, administration fees and lenders mortgage insurance. There are also settlement fees (closing costs) the settlement company will charge. In addition, if a third party handles the loan, it may charge other fees as well.