Buying a home is the biggest purchase many will make in their lives. Prices are so high that many buyers require a mortgage to pay for it month after month over 5, 10, 15 or even 30 years. During the term of your mortgage loan many things can happen, no one is exempt from missing some mortgage payments. The problem is that this can have serious financial repercussions up to and including foreclosure.
To determine the effect of missing a payment on your mortgage, It also depends on how long you let your loan bill expire.
We can all spend paying our mortgage bill and that it expires. If it’s only a few days past your due date, you can still make a late payment without negatively affecting your credit score. Mortgages typically have a 15-day grace period for late payments.. That does not exempt you from extra charges, so it is important that you approach your lender to find out how much more you would have to pay.
After your payment is 30 days late, or you just don’t pay at all, it is up to this point that your credit score can be affected. From then on, your lender will report the late or missed payment to the credit bureaus, and your credit score could drop as a result.
Your payment history represents 35% of your credit score, as it is the record of whether or not you are paying your monthly credit bills on time every month. Since this factor is the most influential in your calculation, your credit score would be seriously affected by not making a payment, regardless of whether it has to do with the mortgage or another type of debt.
Have a lower credit score can prevent you from taking advantage of the best interest rates the next time you need to apply for a loan or line of creditso it is important to keep one healthy.
At 45 days past due, before taking any action against you, the lender will assign a staff member to your loan account to help you learn more about your payment assistance options.
Upon reaching 60 days of not having made your payment, you will incur another charge for late payment, that is, you would have two consecutive overdue invoices. Since the lender will re-inform the agencies of your missed payment, damage to your credit score is magnified.
Once your mortgage payment is 90 days late, your lender will send you a notice known as a demand letter. Basically, this indicates that your payments are behind, and unless you start paying the ones that are missing, the lender will have no choice but to initiate foreclosure proceedings.
Foreclosure is the process in which a property is seized by a lender as a result of the owner not making their mortgage payments on time.. It can lead to a very significant drop in your credit score, further harming your ability to be approved for certain credit products and loans, as well as receive favorable terms on those loans.
Beyond that, if you fall behind on your mortgage payment by 120 days or more (approximately 4 months), the lender will schedule a foreclosure sale on your home and you will lose your property.
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