What does "default" mean concerning a mortgage?

In the context of a mortgage, "default" specifically refers to the failure to make timely payments as agreed upon in the mortgage agreement. When a borrower does not adhere to the payment schedule—meaning they miss payments or do not pay the full required amount—they are considered to be in default. This is a serious matter because it can lead to consequences such as late fees, increased interest rates, and eventually foreclosure if the situation is not remedied.

Understanding the concept of default is crucial for both borrowers and lenders. For borrowers, it highlights the importance of managing their finances to meet obligations. For lenders, it underscores the risk involved in issuing mortgage loans and the potential for loss when a borrower defaults. By recognizing that default is essentially about missed or incomplete payments, one can grasp the gravity of maintaining consistent payment schedules in mortgage agreements. Other options, such as property being sold for a loss, paying off a loan early, or voluntary repossession by the lender, do not accurately define default in the context of mortgage agreements.