Possible Repercussions Of Late Mortgage Payments

Possible Repercussions Of Late Mortgage Payments
By: Shawn Thomas
The repercussions of late mortgage payments vary depending on the severity of your situation, but they are always significant. While this information will vary in specifics from state to state and from lender to lender, these are the general repercussions of making late payments on your mortgage or missing payments entirely.

Fifteen days past due

In general, if your mortgage payment arrives one or two days past its due date, it's not a big deal - if you have communicated with the lender and talked to them about it. Your loan agreement will specify exactly what the penalties for late payment are. In some cases, you will be charged a single flat fee if your payment is late. In others, you may pay a fee for every day that your mortgage payment is late. Often, if you call before your payment is due and talk to your lender, they will be willing to work with you to make it easier on you. The adjustments they may be willing to make include waiving late fees, or making a one-time arrangement to accept your payment late without making a report to the credit agencies. If you don't notify your lender, however, those penalties will accrue and may collect interest. Depending on whether you've been late with your mortgage payments before, there may be further repercussions, including reporting your late payments to a credit reporting agency. A report to the credit reporting bureaus can seriously affect your credit rating, and make it difficult for you to get other help later if it's necessary.

When it reaches fifteen days past due, though, you start seeing repercussions. First, most lenders assess late fees when your mortgage payment is fifteen days past due. That late fee can be far more expensive than you expect, depending on your mortgage agreement. If your mortgage is one with a temporary low preliminary rate, for instance, your late payment may kick in your mortgage rate adjustment and raise your monthly payment amount.

Thirty days past due

Once your mortgage payment is thirty day past due, unless you've made other arrangements with your lender, your lender will report your late payment to the credit reporting agencies. This can negatively affect your credit score for years to come. One late mortgage payment on your credit record can lower your credit score by 100 to 150 points. That can cost you the ability to refinance, or to qualify for other loans in the future. If you are able to refinance at all, it will probably be in the sub-prime market, where you'll pay far higher interest rates on your loan.

Depending on the state in which you live, if your mortgage is thirty days late your lender may decline to accept partial payments on your mortgage. That means that if your mortgage payment is $1,500, and it is thirty days delinquent, you will need to pay $1,500 for your current payment plus $1,500 for your delinquent payment plus the amount assessed for late fees and penalties. If you cannot make the full payment, they may return your partial payment until you can make the full payment.

Sixty days past due

While most lenders are amenable to working with you the first time that your mortgage payment is thirty days past due, by the time it is sixty days past due, you can expect that it will be reported to the credit agencies. A sixty days past due payment actually has a considerably stronger effect on your credit rating than two or three payments that are thirty days late. Keep in mind that your account will continue to be considered delinquent until your mortgage is brought current. Thus if you can't make your April mortgage payment until May, but can't make your May mortgage payment at the same time, your May mortgage payment will be delinquent. Until you make up your missed payment, your account will be delinquent unless you make other arrangements with your lender. Be certain when you talk with your lender that you also understand what and how they will report it to the credit reporting agenices.

120 days past due

At 120 days bast due, your mortgage lender can legally begin pre-foreclosure proceedings against you. If this is the first time that your home is in foreclosure, you may still have some options for negotiation, but at this point, you will find it very difficult to find any lender who is willing to refinance your mortgage or work with you in any other way.

Late mortgage payments have a serious effect on your credit rating and your future ability to get credit. Because lenders rely on your credit score to determine whether to make you a loan, even one late mortgage payment may keep you from being able to refinance a mortgage, get a credit card or buy another house, and those effects can last for years. In addition, a poor credit score may also affect your ability to rent an apartment or get a job. Because of the huge effect that a late or missed mortgage payment can have on your credit score, it's vital that you do everything you can to keep your mortgage payments on time and up to date.



About The Author:
About Author:
Shawn Thomas is a freelance writer who writes about topics pertaining to the mortgage industry such as late fees and the basics of securing a mortgage from a mortgage company.