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The lender may be forced to foreclose on the home when a borrower cannot pay their mortgage.\u00a0\u00a0<\/p>
As we know the mortgage is a loan that is secured by the collateral of a borrower’s property, the borrower is obliged to pay back the debt with a predetermined set of payments.\u00a0<\/p>
As mortgage, is one of the most common debt instruments, it is used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front.\u00a0<\/p>
Over the number of years, the borrower repays the loan, along with interest, till the entire amount is paid off and they own the property free and clear.<\/p>
If a borrower is unable to make payments on their mortgage, the loan goes into default.\u00a0<\/p>
Then the bank has a few options of which foreclosure is the most widely known option by the lenders, it means the lender takes control of the property, dislodges the homeowner, and sells the home.\u00a0<\/p>
However, foreclosure is a long and expensive legal process that a lender might want to avoid because they may not receive any payments for up to a year after beginning the foreclosure process and they will also lose out on fees associated with the procedure.<\/p>
Some lenders may offer a borrower who is at risk of foreclosure the solution of a short refinance.\u00a0<\/p>
A borrower too may ask for this option of short refinance. These are advantageous for the borrowers – A short refinance allows a borrower to keep the home and reduces the amount owed on the property.\u00a0<\/p>
The downside of this being because they\u2019re not paying the full amount of the original mortgage the borrower\u2019s credit score will take a hit.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t