What Does Mortgage Default Mean?

Borrowing a mortgage can be an enormously responsible undertaking. Lenders take extra measures to ensure you can afford it; yet many borrowers still default.

An unsuccessful mortgage default can damage both your credit and future prospects of buying real estate – even for yourself.

What exactly is mortgage default and how does it operate?

What Is Mortgage Default? A mortgage default occurs when loan terms agreed to during closing aren’t fulfilled – most commonly through missing principal and interest payments each month.

Your loan agreement stipulates that payments should be made by a certain date each month; failing to do so puts you into mortgage default and is illegal.

Mortgage default can occur more rarely when property taxes or homeowner’s insurance payments fall behind schedule. Your loan agreement states that you agree to pay these costs and keep your home insured; if that commitment is broken, this constitutes mortgage default.