If an individual or family gets a loan (mortgage) to buy a home and does not make the required monthly mortgage payment, the lender (e.g., a bank) can foreclose on the home. This means that the lender will take back ownership of the home and, after a period of time, the homeowner must move out and look for another place to live. Additionally, upon foreclosure, homeowners generally lose all their home equity (calculated by subtracting the amount of the mortgage from the value of the home), if any. Foreclosure is considered an extremely negative mark in a person's credit report and should be avoided, if at all possible, by making mortgage payments a bill-paying priority.
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