Basically, a company lends you a certain amount of money that you promise to pay back as well as interest on that amount. If you can't pay it back, the company is in line to take your home. Now that's not a pleasant thought. Mortgages are serious business.
There are three parts to a mortgage.
How much you are borrowing
How much more you are paying for the privilege of borrowing the money, determined by the interest rate agreed upon