It is imperative to prove that borrowers can manage the financial responsibility of a mortgage as these loans usually span several years. If borrowers underestimate their ability to repay, they may find themselves in too deep and risk losing their homes or experiencing severe economic hardship. Taking on more debt than you are prepared for could lead to disaster – so be sure you understand your own financial limits before signing any contracts! When affordability is not monitored, it can also have far-reaching economic effects such as expanding household debt and financial insecurity. However, by examining loan applicants’ ability to pay back the money even with fluctuating interest rates or changing situations, lenders guarantee that borrowers are able to meet their obligations while minimizing the chance of unpaid loans – thus fostering responsible lending practices.