12 Jun How does missing a mortgage payment affect me?
Missing a mortgage payment is never intended by a homeowner, but sometimes circumstances lead to a late mortgage payment. If you are struggling to make your payments, here’s what you need to know about what happens when your mortgage payment is more than 15 days late.
Most lenders allow a 15-day grace period, which means that a payment is considered late if it posts 15 days after its due date. One late mortgage payment will not result in a foreclosure, but it will have two major negative impacts:
- The three major credit bureaus will be alerted which will result in a lowered credit score.
- You will be charged a late fee.
After two late mortgage payments, you are in danger of foreclosing on and losing your house. Clearly, from time to time, life events can happen which might set you back and cause you to miss a payment on your mortgage, but if you are in a situation which will cause more than one late payment. Your best option is to contact your lender to inform them of your reasons for paying your mortgage late. Some lenders will help you to seek out resources to get you back on track.
However, in some cases, such as long-term job loss, it might be impossible to stay up to date or to catch up. Once you fall behind, the results of foreclosure can set you on a difficult financial path to recover from. It can lead up to a 160-point drop in your credit score and potentially make it difficult to borrow money in the future.
If you find yourself at risk of two or more late mortgage payments, one way to avoid ruining your credit and risking future negative implications is to sell your house and liquidate it in an effort to downsize and free you from the risks of having your house foreclosed on.