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Life happens, and sometimes you might find yourself in a situation where you’re unable to make your mortgage payment on time. While a delay of a day or two might not seem like a big deal, it’s important to understand the potential consequences of even a slightly late mortgage payment.
We’ll go into the specifics of late mortgage payments in this guide, including the grace period, late fees, and the effect on your credit score. We’ll also talk about some choices you have if you’re having trouble paying your mortgage.
Understanding the Mortgage Grace Period
Most mortgage payments are due on the first of the month. However most lenders offer a grace period which is a set time after your due date during which you can still make a payment without incurring a penalty. The grace period typically lasts for 15 calendar days. So, if your mortgage payment is due on the first of the month, you have until the 16th to make the payment without being charged a late fee.
Consequences of a Late Mortgage Payment
Late Fees: You will probably be assessed a late fee if your mortgage payment is not made within the allotted grace period. This fee can be applied each month that you miss a payment, and it can range from 4% to 5% of the total overdue balance.
Credit Score Impact: A late mortgage payment can negatively impact your credit score. This is because your payment history is a significant factor in your credit score calculation. Even one late payment can cause your score to drop, and the impact can be more severe if you miss multiple payments.
Default and Foreclosure: If you continue to miss mortgage payments, your lender may eventually declare you in default. This can lead to foreclosure proceedings, which could result in you losing your home.
Options if You Can’t Make Your Mortgage Payment
If you’re struggling to make your mortgage payments, it’s important to reach out to your lender as soon as possible. They may be able to work with you to find a solution such as a loan modification or forbearance.
Loan Modification: By changing the terms of your mortgage, you can lower your monthly payments. This can entail lowering your principal balance, extending the repayment period, or lowering your interest rate.
Forbearance: A forbearance allows you to temporarily pause or lower your mortgage payments for a set period. This can be helpful if you’re experiencing a temporary financial hardship.
Other Options: If you want to sell your house for less than you owe on the mortgage, you might also think about doing a short sale.
While a late mortgage payment can have negative consequences, it’s important to remember that there are options available if you’re struggling to make your payments. By reaching out to your lender and exploring your options, you can work towards finding a solution that helps you keep your home.
Factors that impact the foreclosure timeline
Your lender, your state’s foreclosure laws and regulations, and in certain situations, the state of the housing market, are some of the variables that will affect the foreclosure timeline.
How many mortgage payments can I miss before foreclosure?
Foreclosure procedures typically start after four consecutive missed mortgage payments totaling 120 days, but this isn’t always the case. The housing market in which you live, your municipality and your lender may all impact the foreclosure timeline.
Timelines on foreclosures usually vary per state and lender, and the process of foreclosure takes time. For instance, you might receive a Notice of Default, the first step in the foreclosure process, if you don’t get in touch with your lender after you miss a payment. Do not ignore it. Read it carefully, and if you plan on making the payments follow the instructions exactly. Failure to follow instructions may negate the benefits of making your payment.
Following ninety days, you will typically receive a formal Demand Letter or Notice to Accelerate from your lender, giving you thirty days to pay off your mortgage and bring it up to date. However, getting these letters and notices doesn’t necessarily mean foreclosure is a done deal. Since the majority of lenders do not want to foreclose on a home, delinquencies can frequently be resolved even when three or more payments have been missed. There’s a good reason for both parties to try and work out a resolution because avoiding foreclosure benefits both the borrower and the lender.
A foreclosure timeline typically consists of five stages, but you can usually halt the process at any point by working with your lender to pay off the remaining debt before the foreclosure of your home occurs. Here’s the typical rundown:
- Missed payment: The 15-day grace period expires when you fail to make your mortgage payment. In addition to paying late fees, your lender may contact you by phone or letter regarding the overdue payment.
- Notice of Default: Following three months of delinquent payments and a lis pendens, your lender will normally file an official Notice of Default. A copy will be sent to you through certified mail, or in certain states, you may find it nailed to your front door. It is also registered with the local recorder’s office. Regretfully, getting a Notice of Default could negatively affect your credit: Credit agencies might not notice it for a few months, but they eventually will.
- Preforeclosure: This phase of the process takes place in between getting your default notice and having your foreclosed home put up for auction. Your mortgage will be deemed current if you settle the outstanding balance at this point, along with any interest, penalties, bank fees, and legal costs. The time window for this phase will vary depending on the state in which you reside.
- Notice of Sale: Subsequently, your lender files a Notice of Sale and arranges for an auction date and time for your house. Information about the sale might be put up on your property or on the door of your house, as well as in neighborhood newspapers and public spaces like courthouses. The amount owed on the mortgage will be increased by the cost of the advertising and maybe the auctioneer’s fee. Depending on where you live, you may be able to use your “right of redemption” to reclaim your home if you are able to pay all of the costs and outstanding balances by the auction date or, in certain circumstances, even after it has happened.
- Eviction: This is the final part of the foreclosure process. You and your family will be required to leave your sold home; if the buyer permits it, you may have a few days to do so. Law enforcement officers will show up to enforce an eviction if you refuse to comply. The marshal or sheriff will show up at your house with the order, throw you and everything you own out on the streets. But, you might be able to arrange a “cash for keys” agreement with the lender or buyer. They will give you a small payment to leave because they don’t want the house damaged or to have to pay the legal fees.
When is a mortgage payment actually considered late?
FAQ
Can I pay my mortgage 2 days late?
How many days can you miss mortgage payment?
Will one late mortgage payment hurt?
How long does it take to recover from a late mortgage payment?
What happens if I make a late mortgage payment?
If you make your mortgage payment during a grace period, you will avoid a late fee. If you make a payment after your grace period ends, you will incur a late fee. What happens if you make a late mortgage payment?
How much does it cost to pay a mortgage late?
The late fees are usually a percentage of your monthly payment. For example, say your monthly mortgage payment is $1,200 and there is a 5% late payment penalty. If you make a late payment, you’ll be charged an additional $60. For most people, $60 isn’t small change.
What happens if I make a late payment?
This makes it more and more difficult to get back on schedule with your monthly payment. The late fees are usually a percentage of your monthly payment. For example, say your monthly mortgage payment is $1,200 and there is a 5% late payment penalty. If you make a late payment, you’ll be charged an additional $60.
What happens if I miss a mortgage payment?
Keep in mind that this process can vary depending on your state and other factors. After your mortgage payment grace period expires, your mortgage servicer will charge a late fee for missed payment. This late fee may amount to 5% of the principal and interest amount due.