What is a major risk of borrowing more than one can afford?

Borrowing more than one can afford carries significant financial risks, primarily the risk of foreclosure and financial difficulties. When individuals take on debt beyond their means, they may struggle to keep up with monthly payments. This can lead to missed payments, which can severely impact credit scores and result in late fees or penalties. Over time, persistent financial strain can create a situation where the borrower is unable to meet mortgage obligations, resulting in foreclosure—the legal process in which a lender takes possession of the property when the borrower fails to pay their mortgage.

Additionally, financial difficulties may extend beyond the inability to pay the mortgage. Individuals may find themselves unable to manage other essential expenses, such as utilities, insurance, and basic living costs, leading to a cycle of debt and potential bankruptcy. The risk of foreclosure is not just a financial issue but can also have long-term implications on one's ability to purchase a home in the future or secure loans for other major expenses.

In contrast, the other options do not accurately represent the consequences of borrowing more than one can afford. Increased savings potential and opportunities for home buying might seem appealing, but they do not address the real risks associated with excessive borrowing. Similarly, guaranteed approval for loans does not correlate with responsible borrowing practices and financial stability.