1 Pet. 1:3-5 - Our Inheritance

3 Blessed be the God and Father of our Lord Jesus Christ, who according to His great mercy has caused us to be born again to a living hope through the resurrection of Jesus Christ from the dead,
4 to obtain an inheritance which is imperishable and undefiled and will not fade away, reserved in heaven for you,
5 who are protected by the power of God through faith for a salvation ready to be revealed in the last time.

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vs. 3 - "according to His great mercy" - we are saved by mercy and grace, no more. It is not that God is condemning those who deserve salvation, but that God is saving those who deserve condemnation. See John 3:36 - The one who believes in the Son has eternal life, but the one who refuses to believe in the Son will not see life; instead, the wrath of God remains on him; Titus 3:5 - He saved us —not by works of righteousness that we had done, but according to His mercy—through the washing of regeneration and renewal by the Holy Spirit. Rom. 9:16 - So then it does not depend on human will or effort but on God who shows mercy.; See also: Gal. 6:16; Eph. 2:4,5; Eph. 7-9; Rom. 5:8.

"caused us to be born again" - God does not try to rebuild our old selves which are the old nature. We are given a completely new self, a new creature. The old self died with Christ, the new self rose with Christ. If you watch the 'Home & Garden' channel on cable TV, you will see people buying houses and remodeling them. Quite often, if the house is old, they end up gutting the house, tearing down walls, ripping off sheet rock or lathe-and-plaster, tearing up floors. After the work is done, the house appears new. But it still has the same 'bones', same foundation and wall structure. A lot of the original house is still there. You just don't see it. New paint, new flooring, some new appliances and hardware, but the original house is still there.
Our salvation does not happen that way. We will receive a new unblemished body to go with our new spirit when Christ returns before we die, or at resurrection. This is not a cosmetic make-over, nor a remodel job. While we still live on earth, we have our old natural body, our old natural self. The spiritual war that goes on within us is the battle between the old nature and the new. God does not force us to live in any certain way. Our salvation is totally voluntary - "God does not overpower, He can only woo." (The Screwtape Letters, C. S. Lewis). The same is true of living out our salvation - we must give control to the Holy Spirit. He does not wrest it from us. The fascinating aspect of our Christian life is that while we live on earth, we have both (yes, both) the old sinful nature and the new nature within us. That is the perplexing dilemma we face. Each day, each moment we are required to make a decision - to follow the old sinful nature, or to obey the Lord per the new nature. It is easy to follow the old self - it feels right, it is comfortable. We have done it all our lives. Some have called it 'auto-pilot'. We do things habitually. Our task is to develop new habits - those following Jesus. See 1 Pet. 1:23; James 1:18; John 3:1-21; 2 Cor. 5:17; Gal. 6:15; Rom. 6:4-6.

"... living hope through the resurrection of Jesus Christ" - Our hope is Christ resurrected. We are really pitiful if our hope in Christ's physical life only. If Christ did not rise from the dead, all of his claims were lies or gross delusions. Christ's resurrection is the biggest story in human history. He lives. We can stake our lives on that fact. See: 1 Cor. 15:12-26 - Now if Christ is proclaimed as raised from the dead, how can some of you say, “There is no resurrection of the dead”? But if there is no resurrection of the dead, then Christ has not been raised; and if Christ has not been raised, then our proclamation is without foundation, and so is your faith. In addition, we are found to be false witnesses about God, because we have testified about God that He raised up Christ — whom He did not raise up if in fact the dead are not raised. For if the dead are not raised, Christ has not been raised. And if Christ has not been raised, your faith is worthless; you are still in your sins. Therefore, those who have fallen asleep in Christ have also perished. The message is if Christ is not resurrected, then no one is. We have believed and died for nothing. But God has promised it. His promises are true. We have life eternal. See also 1 Cor. 15:50-57; 1 John 3:2,3; 2 Thess. 2:16.

vs. 4 - "inheritance... imperishable... reserved in heaven" - We receive the inheritance, eternal life, through the work of Christ on the cross and His resurrection. It is kept safe in heaven by the Lord. Our greatest reward is eternal life with Christ Jesus, the Lord. That should be enough. I will confess that eternal life is hard to imagine. And since it is so 'far away' both in time and understanding, Jesus has given us more. He has given us a better life here and now. The Holy Spirit is in us to guide, counsel, and help. I am not advocating a 'prosperity gospel', but strength to face trials and trouble, peace to calm our hearts and souls. I cannot guarantee that as a believer I will not have troubles, pain, sickness, or issues with other people. "My peace I give to you." John 14:27 Oh, the wonders we will see as we walk the streets of heaven on that day. John, in Revelations, attempts to describe it. See Revelations 21:1-22:5.
See: Eph. 1:14; Acts 20:32; Luke 12:31-34; Matt. 6:19-21; John 10:27-29, 14:1-3.

vs. 5 - "... protected by the power of God through faith." The omnipotent God, who through grace saves us from condemnation by our faith in Christ, will never let us be separated from Him. See: 2 Tim. 1:12; John 10:27-29; Eph. 1:18-23, 2:8-9, 6:13; Col 2:9-10; Heb. 1:3; 7:25; 11:6; Rom. 1:16-17.
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1 Peter 1:1-2 - Salutation

1:1-2 - Salutation
1 Peter, an apostle of Jesus Christ, To those who reside as aliens, scattered throughout Pontus, Galatia, Cappadocia, Asia, and Bithynia, who are chosen
2 according to the foreknowledge of God the Father, by the sanctifying work of the Spirit, to obey Jesus Christ and be sprinkled with His blood: May grace and peace be yours in the fullest measure.
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See note 1 below.
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vs. 1 - Peter - one of the first disciples called to walk with Jesus and learn directly from Him. There are a couple of different accounts in the gospels of how Peter came to follow Jesus. In Matthew 4:18, Jesus calls Peter and Andrew from their fishing jobs to follow Him. In John 1:35-42, Andrew is following John the Baptist, physically and spiritually. Jesus walks by the day after John baptizes Him. Andrew was with John, and was listening when John calls Jesus the 'Lamb of God". Andrew and another guy begin to follow Jesus right then. Andrew goes to his brother, Simon, and tells him Jesus is 'the one they have been looking for'; the one John the Baptist has been telling them was coming. Simon goes with Andrew to see Jesus, and Jesus immediately gives Simon the name Cephas (Greek), or Peter (English version of Cephas). We know that 'Cephas' or 'Peter' means 'rock' or 'stone', and this is significant later in Jesus' ministry.
See: Matt. 16:15-19 Jesus and the apostles (not apostles at that moment, but disciples - they would later become apostles) were discussing 'who' Jesus was - just what was his role in Israel, Jerusalem, and the world. Jesus asks, and Peter gives the 'Great Confession'. Jesus uses this exchange to emphasize the confession is the bedrock (foundation) of the building of the kingdom of God. Peter is not the foundation. Jesus, the Son of God is the foundation. Confession that you believe and accept this fact is your entry to His kingdom.

Apostle - This is one sent, a messenger. It is a unique office of the church. These are people specifically called by the Lord Jesus Christ. There is, or was, a limited number of apostles - no more than 13 to 15 - the original twelve disciples called to walk and learn with Jesus, plus Paul. The twelve was reduced to eleven soon after Jesus was crucified - Judas Iscariot hung himself after giving back the 30 pieces of silver he received for betraying Jesus.
Paul was accosted by Jesus on the road to Damascus. This is amazing, since it was several days, maybe months after the resurrection of Jesus. See Acts 9:3-7 and following. Paul is struck to the ground by the brilliance of Jesus' presence (No one else in the group saw anything). Paul knew it was God, the Lord, speaking to him. He was confused because he was sure he was doing God's will by persecuting the believers of Jesus.
He is asked "Why are you persecuting Me?" You can almost hear the confusion in Paul's response, basically, "What!? Who are You? I am eliminating blasphemers! I am doing God's work! How could I be persecuting the Everlasting God?" Jesus' answer is simple, "I am God. And you are attacking Me." It is probably a stretch to say that Paul was blinded by his arrogance, and then was blinded by his encounter with the Living God. Fortunately both cases of blindness were temporary. Then Paul was taught by the Lord Jesus, and was 'called' to preach the gospel to the Gentiles.

'Called' is one of those particularly Christian words, or concepts. Pastors are 'called', missionaries are 'called'; but what does it entail? I think it is one of those things that cannot be described, but you know it when you get it. There are people who are singers, musicians and they are not satisfied unless they are singing and making music. Writers sometimes admit they are not happy unless they write. People who are 'called' to the ministry know that they need to serve the Lord, wherever that may be.

those who reside as aliens - Aliens in two senses -

1. refugees - driven from their homes because of their faith. See Acts 8:1-8 ...and all except the apostles were forced to scatter throughout the regions of Judea and Samaria.; See Acts 11:18 Now those who had been scattered because of the persecution that took place over Stephen went as far as Phoenicia, Cyprus, and Antioch. Christians were being driven from their homes, their towns and villages because of the persecution. The Jews were the initial persecutors. The Jews were furious with the Christians, assuming they were being blasphemous to Judaism.
   The Jews did not accept or believe the resurrection happened. If they believed that Christ was raised from the dead, then they might need to abandon Judaism to believe in Christ and become Christians. By not accepting the fact of the resurrection they did not need to accept Jesus as God. Persecution from the Romans and other governments came later. Again, the persecution of Christians was not, and is not usually because of the belief system (Christianity) but because the Christians would not deny their faith in Christ and accept a different belief system - such a worshiping Caesar as a god, or in today's world, Islam.
2. We are citizens of heaven, strangers in this world. See Psalms 39:12; 1 Pet. 1:17 This world is your temporary residence; see Eph. 2:19 So then you are no longer foreigners and non-citizens, but you are fellow citizens with the saints and members of God's household,; Phil. 3:20 But our citizenship is in heaven...; We are now citizens of heaven, having once been at enmity with God, but now are at peace; Col. 3:3 for you have died and your life is hidden with Christ in God.; See 1 John 3:1; James 4:4. We are now God's friends not enemies, his children not strangers. Our life is now His; we are in Christ, and He is in us.

This is one of those amazing, incredible, astounding statements of the New Testament, about the church, about the believers. Christ, Lord of Glory, the Creator of the universe, is in us! Add the Holy Sprit, in us, and you have the reason we no longer need to fear Satan, no longer need to fear failure, and we have hope.
This is also the reason that we must live our lives in such a way that Christ living in us is obvious to anyone who looks at our lives. That is a lot of responsibility. Am I living, right now, today in a way the glorifies Jesus and the price He paid? If not, I need to change my behavior immediately. I need to change my way of thinking.

who are chosen - "chosen" and "elect" are used interchangeably; and almost always used to describe a person special to God. It is not often used in a verb sense. Christ said that He called his apostles first, and then they responded. See John ?.

"Chosen" is usually a title of position - we are 'chosen' because we are in Christ. I do not think we are in Christ because we were chosen. (The latter is sort of like "I pick you, and you, and you - but not you. Sorry." Insert sad emoji here.)
A possible reading of the word "chosen" is Sovereign God, omnipotent and omniscient, can pick and choose whom He pleases. Who are we to tell Him what to do? However, I see a conflict with other verses in the scripture if we try to hold to that interpretation.
For example, these promises:

1. all who profess Christ are saved: See Rom. 10:9-10 because if you confess with your mouth that Jesus is Lord and believe in your heart that God raised him from the dead, you will be saved. For with the heart one believes and thus has righteousness and with the mouth one confesses and thus has salvation; See Matt. 10:32 "Whoever, then, acknowledges me before people, I will acknowledge before my Father in heaven.; See John 1:12.
2. Anyone who so desires may come: Matt. 5:6 "Whoever, then, acknowledges me before people, I will acknowledge before my Father in heaven. See also: Matt. 10:32; 28:18-20.
3. Go, witness, make all men my disciples - Matt. 28:18-20; See Acts 1:8 But you will receive power when the Holy Spirit has come upon you, and you will be my witnesses in Jerusalem, and in all Judea and Samaria, and to the farthest parts of the earth.

If only certain pre-selected ones are saved, no others have even a hope, because they would be explicitly excluded. Even if they desired salvation, they could not have it. To base salvation totally and only on God's sovereignty takes away from God's grace. That doesn't make sense to me. I am not trying to fit God into my mold, or my theology. I believe God is orderly, has set down rules and procedures, has made promises that He keeps. Saying on one hand, "All that will come, may come," and in another breath (so to speak) "Only those I pick of those who respond may be saved" is contradictory to what I read in the Scripture. It seems cruel to tell people they have hope for salvation, only to tell them after they die that there was no hope after all. God is not that cruel - He is not cruel at all. See Eph. 2:8-9; and see 1 Cor. 15:19, we have hope for a better life now, and hope for much better in the next.
vs. 1-2 - "who are chosen according to the foreknowledge of God." Two points to consider:

1. God sees events from the end of all things, as well as from the beginning and the present. For example, He chastises us now because He see the end result as well as our present actions. God 'foreknows', that is, knows beforehand, who will come to Him for salvation (omniscient, remember). But knowing and arbitrarily choosing are not the same. God is no respecter of persons (Rom. 2:11 - For there is no partiality with God.) God must know, He has to know who the chosen ones are. If God picked people for salvation, there is no reason for Him to be patient - see 2 Pet. 3:9 The Lord is not slow concerning his promise, as some regard slowness, but is being patient toward you, because he does not wish for any to perish but for all to come to repentance., or Matt. 11:28 Come to me, all you who are weary and burdened, and I will give you rest.
2. God planned before time began that we would be saved in this manner: by believing on the Lord Jesus Christ as our personal Lord and Savior. See 1 Pet. 1:20 He was foreknown before the foundation of the world...; Rom. 8:28,29; 1 Tim. 1:9 He is the one who saved us and called us with a holy calling, not based on our works but on his own purpose and grace, granted to us in Christ Jesus before time began,; See Acts 2:23 and Eph. 1:4.

vs. 2 - "by the sanctifying work of the Spirit" - There are a number of aspects of this work:

1. God draws men to himself through Holy Spirit; 2 Cor. 3:6 who made us adequate to be servants of a new covenant not based on the letter but on the Spirit, for the letter kills, but the Spirit gives life.; John 6:63 The Spirit is the one who gives life; human nature is of no help! The words that I have spoken to you are spirit and are life.
2. The Spirit guides us into the truth - Acts 4:12; John 16:13 .
3. Christ is the acceptable sacrifice for the world's sin. Heb. 9:12 and he entered once for all into the most holy place not by the blood of goats and calves but by his own blood, and so he himself secured eternal redemption.
4. We have eternal life through the work of the Holy Spirit - Rom. 8:1-27; Gal. 5:25 If we live by the Spirit, let us also behave in accordance with the Spirit.
5. We have been perfected by the Holy Spirit. There is no darkness in us - Gal 3:2,3 The only thing I want to learn from you is this: Did you receive the Spirit by doing the works of the law or by believing what you heard? Are you so foolish? Although you began with the Spirit, are you now trying to finish by human effort?;
6. Sanctified, or made holy - John17:17 Set them apart in the truth; your word is truth.
7. God is light, with no darkness; 1 John 1:5 - Now this is the gospel message we have heard from him and announce to you: God is light, and in him there is no darkness at all. See also: Jam. 1:17. Sin is darkness and we are sinful (Rom. 3:23 for all have sinned and fall short of the glory of God.); we cannot come into the presence (or, rather live in the presence) of God.
8. Sanctification is three phased -
1. (a) Instantaneous - when we accept Christ;
2. (b) Progressive - as we live in obedience, we become more like Him, 2 Cor. 3:18 - And we all, with unveiled faces reflecting the glory of the Lord, are being transformed into the same image from one degree of glory to another, which is from the Lord, who is the Spirit.
3. (c) Completed - when we become as Christ is now, 1 Cor. 15:51-58 Listen, I will tell you a mystery: We will not all sleep, but we will all be changed - in a moment, in the blinking of an eye, at the last trumpet. For the trumpet will sound, and the dead will be raised imperishable, and we will be changed.For this perishable body must put on the imperishable, and this mortal body must put on immortality.Now when this perishable puts on the imperishable, and this mortal puts on immortality, then the saying that is written will happen, "Death has been swallowed up in victory." "Where, O death, is your victory? Where, O death, is your sting?" The sting of death is sin, and the power of sin is the law. But thanks be to God, who gives us the victory through our Lord Jesus Christ! See also: 1 John 3:1-2.

"that you may obey Jesus Christ" - We have been saved according to the predetermined plan of the Father. Salvation is not the goal of obedience; obedience is the result of salvation. Eph 2:8-10. We often make the mistake that if we are good enough, God will love us. If we are just obedient enough He will be pleased and save us. Silly people! There is nothing we can do, on our own, that will bridge the chasm between us and God. No amount of obedience, sacrifice, hard work will bring sinless perfection. God knows this! So He has provided the way, at no cost to us, and immeasurable cost to Himself for us to be His friends, His family.

Peter, Paul and the other Apostles understood this amazing fact. I think this concept exploded in Peter's mind like dynamite - he was gob-smacked! It is no wonder that the Apostle Paul was aghast that believers would think it okay to live a life of sin after being saved. We are exhorted to live a life 'worthy' of the price. I visualize the word 'Exhorted': a football coach running the sideline hollering as loud as he can to his running back, "Run! Run! Go hard! The goal is right there! You can do it!"

"and be sprinkled with His blood." Christ, the Great High Priest, cleanses us with His own blood - Heb. 9:6-14. We are purified for Him - Titus 2:14 - He gave Himself for us to redeem us from all lawlessness and to cleanse for Himself a people for His own possession, eager to do good works, Heb. 10:21-22; Heb. 12:24.

"grace and peace" - At least two aspects of this phrase - (1) It is more than the grace of salvation, but grace upon grace - the Holy Spirit living in control of the life, living by faith. (2) the peace of Christ - John 14:27 - Peace I leave with you. My peace I give to you. I do not give to you as the world gives. Your heart must not be troubled or fearful.
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Note 1: In general I will "italicize" quoted scripture, or fragments of scripture; list scripture references in bold; and will underline Words or phrases from the verses of 1 Peter on which I am focusing.