What is a common consequence of defaulting on a mortgage?

Defaulting on a mortgage typically leads to serious financial repercussions, with one of the most significant consequences being the potential for foreclosure. When a borrower fails to make mortgage payments as agreed, the lender has the legal right to initiate foreclosure proceedings. This process allows the lender to reclaim the property through court proceedings, ultimately resulting in the loss of the homeowner's rights to the property.

Foreclosure can devastate a borrower's credit score, making it difficult to secure loans in the future and impacting their ability to purchase another home for many years. Additionally, foreclosure is a complex and often lengthy legal process that can lead to additional financial burdens, including legal fees and the loss of equity that the homeowner may have built in the property.

While other options like an increase in property value or refinance approval might seem appealing, these outcomes are not typical in situations where a mortgage is in default. An extension of the loan term is possible, but it is not a direct consequence of defaulting. Instead, the most critical and immediate outcome is the risk of foreclosure and the resulting loss of the property.