Confused about the right time to make a mortgage payment? This article will answer all your questions!
Have you ever missed your mortgage payment deadline? If you think you missed it because you were unable to make the payment on the due date, then you lack some basic information about mortgage payments.
This article will help you learn about all possible times, reasons, and situations when your mortgage payment is considered late. So let’s get started.
Before initiating the discussion about late mortgage payment consequences and timings, it is important to first understand what exactly is a mortgage payment.
A mortgage payment includes two major components, principal and interest. The principal constituent covers the original amount of loan while the interest part includes paying interest to the loan lender.
Now that you have understood the mortgage payment, it is time to move further.
Mortgage Declined Due to Late Payment
Do you think that your mortgage payment was late because you missed the due date? No, missing the due date is not always the answer. There are other pieces of this puzzle that we have discussed below:
A grace period is a time granted to you as a bonus. It allows you to make a mortgage payment after the due date to pay your bills has passed. Many lenders are considerate enough about the difficulties different borrowers face in paying high mortgage bills and hence are highly supportive. All borrowers are granted different grace periods depending on who your lender is.
If you fail to make payment before the 1st date of the month, then you can still avoid late mortgage payment consequences by making the payment during the grace period.
Such payment is not considered late and you are also not penalized in any way. Only your lender gets to know about your late payment during the grace period.
Usually, the grace period duration is 5 – 15 days, after which your payment is rejected. So the first thing after you sign up for a mortgage is to check your exact grace period dates.
Another important thing is to ensure that the payment method you are using to make mortgage payments is acceptable by your specific lender. There are different forms of payment options available like online payments, postal mail, etc.
For example, if the 15th is the final due date to pay your bills, then you should use some quick payment method like online through the lender’s website, etc. Only in a postal mail method, the lender evaluates your payment based on the date it is received.
Hence, in such last-minute payments, if you decide to use postal mail service, then your payment may take some time to reach your lender. This could ultimately result in the lender marking your payment as late.
Business & Non-Business Days
Some lenders include non-business days like weekends etc. in the grace period while others don’t. This is the reason why I have placed a major emphasis on the importance of reading and understanding your specific lender’s requirements.
If your lender has given you late mortgage payment forgiveness in the form of a grace period, then maximum chances are that it includes non-business days as well. Now, on non-business days, you have limited payment options available most of which are online. Hence, if you have already missed your due date then you not only need to know about your grace period duration but also if non-business days are included in it or not.
When Is A Mortgage Payment Considered 30 Days Late
If you fail to make mortgage payments during the grace period but can pay your bills within 30 days then you need to pay a late fee.
In this case, your lender will know about your late payment behavior but he will not report it to higher authorities in credit bureaus. This means that in this situation you will not end up in default but you need to be extra careful in making your future mortgage payment.
Get Support From Your Lender
Most lenders start following up on borrowers when they miss the due date. Others wait until the last date of the grace period. In any case, where you are late in paying your bills, the best solution is to call your lender, talk to them about your late payment and ensure that you will pay within the grace period.
If you cannot make payment within the allotted grace period, then also it is better to call your lender to find out ways to get late mortgage payment forgiveness. You can tell your lender the actual reasons behind your late payments. If you are 30 days late, then you may discuss some alternative ways to arrange payments with your lender.
When Is A Late Mortgage Payment Reported On Your Credit
If you repeatedly miss your mortgage payment due dates and also fail to pay the late fees then your credit score becomes negative and you are in default. This means that the credit bureau will become fully aware of your account and they will mark it late in their systems.
Late Mortgage Payment Consequences
As soon as your payments become late by 60 to 90 days, your lender will inform higher authorities regarding your account late payments. This means that now you have to pay high fees along with a negative impact on your credit score.
The consequences of late payments only keep getting worse with time. Here is a list of total number of days after you missed the due date and the direct consequences involved:
- After 1 day: You are in a grace period which can be of maximum 15 days depending on your lender. You need to pay your bills before the grace period expires. Here, you will not be charged any extra fees
- After 15 days: You have missed the grace period. Now, you will charged some overdue fees
- After 30 days: Your credit score will start decreasing as after 30 days your lender will report your account to the credit bureau.
- After 45 days: : Your lender appoints a person to look after your case and to help you find a solution through available options.
- After 60 days: Your lender starts keeping a regular check on you. You will be charged a late fee.
- After 90 days: Your lender starts compiling your case to proceed for foreclosure.
- After 120 days: Your account will be sent for foreclosure.
Now, that you know the main reasons why your mortgage declined due to late payment ,you can easily avoid the late mortgage payment consequences. You need to be fully aware of the number of business and non-business days included in your grace period.
You should also ensure usage of proper payment methods depending on your lender’s needs to avoid any payment delays.
Finally, just make sure you don’t get any later than the grace period duration in paying your bills. In case of an emergency situation where you know for sure that it will not be possible to make payments during the grace period, talk to your lender and find a solution. At maximum, just never cross the 30 days deadline to prevent your credit score.
We hope that the next time when you have to pay your mortgage bills, you choose a right payment date to avoid late mortgage payment consequences.