What does mortgage default mean?

Mortgage default occurs when a borrower fails to meet the obligations outlined in the mortgage agreement, typically by missing scheduled payments. This can lead to serious consequences, such as foreclosure, where the lender can take possession of the property to recover the outstanding debt. Default not only affects the borrower's ability to keep their home but also damages their credit score and limits future borrowing options. Meeting mortgage obligations is essential for maintaining ownership and ensuring financial stability.

The other options pertain to different mortgage-related concepts. Paying off a mortgage early refers to the borrower fulfilling their debt ahead of schedule, which is often associated with financial planning and potential penalties for early repayment. Transferring a mortgage to another lender involves refinancing or selling the mortgage to a different financial institution, which does not relate to failing to meet obligations. Applying for a lower interest rate is a proactive step to reduce mortgage costs, but it does not imply any default or failure to meet obligations.