Michelle is looking to buy a house. She has been working a lot to put money up for the house. Of course she can not buy a house with just cash. She has to show the bank that she has good credit and then they can buy the house for her and then she can use the money she worked up to pay it back which would be the mortgage.
Michelle is at the bank speaking with whom we would know as a lender. She asks for a loan to buy the house and the lender will ask for collateral which means something equally as valuable as the house so that they can trust she will pay back the loan they gave her. They also have to know Michelle's history with borrowing money, so they look up her credit report. They see that she has no potential negative inquiries and she has never been late on any payments. With this information the lender decides to grant Michelle's loan request. Since Michelle is requesting for money from the bank, this would make her the borrower. Michelle can now buy the house. She is very happy!
Michelle is now at her new house which she is readying to move into. The bank has sent her a notice of when the first payment is due. Because Michelle has already set up all the money she will need for this specifically, she will not have to worry about having enough money to pay the mortgage or being late on a payment.