In what scenario does a borrower incur a late charge?

A borrower incurs a late charge when their payment is overdue. This situation arises when the borrower fails to make the required loan payment by the specified due date outlined in the mortgage agreement. Most mortgage contracts specify a grace period, after which a late fee can be assessed. This fee serves as a penalty for not meeting the agreed-upon payment schedule and is meant to encourage timely payments.

Refinancing, defaulting on the loan, and extending the mortgage term do not directly trigger a late charge. Refinancing involves obtaining a new mortgage to pay off the existing one, and it does not pertain to payment timeliness. Defaulting on the loan refers to a more severe breach of the loan agreement that can lead to foreclosure, which involves legal processes rather than late fees. Extending the mortgage term may result in different payment structures, but again, it does not automatically generate a late charge unless payments are not made on time.