Buying a home is a dream that becomes a wonderful reality for homeowners. However, one not so fun reality is nearly 10% of renters and homeowners in the US have at least 2 missed payments on a home.
This is a problem that is growing as we continue to struggle through the COVID epidemic. What problems occur when you miss a payment? Keep reading to learn what can happen and how you can get back on track.
Timeline for Missed Payments
There are multiple phases that occur when you’re late on home payments. Remember, even missing one day means you are late. The good news is that you won’t deal with late fees or penalties.
Most mortgage lenders give homeowners a 15-day grace period to catch up on late payments. After those days pass, you may have a late charge on your account. This fee varies but you can expect it to be a small percentage of your monthly charge.
Once you hit 30 days of no payment, lenders will report the non-payment to the credit bureau which hurts. If you still are unable to pay payments, it’s a good idea to work things out between you and your lender. This can be a way to bury the hatchet.
Going 45 days without payment can hurt those looking to buy a home again. At this stage, lenders will hire someone to speak to homeowners of available options.
Late Payments Can Result in Foreclosure
Lenders treat those who are 60 days or more late harshly. You can expect an additional late fee. Your lender may also attempt to reach out to you multiple times concerning payment.
If you ignore calls from your lender and climb your way to 90 days late, you will receive a letter of notice. This is a letter that states your lender plans to foreclose on the home should you not give payment.
At 120 days late your lender may start foreclosure proceedings. It’s possible to reverse the foreclosing process if you want to keep your home. You can check out webuyhousesmemphistn.com for help.
Late Mortgage Payments Eat at Your Credit
Making your monthly payments on time will help boost your credit score. Failing to make those payments will do the opposite and hurt your credit.
Keep in mind that creditors start reporting payments as late when you’re 30 days or more late. Those with good to excellent scores may have as much as a 50 point drop.
A single late payment may be something you can recover from overtime. However, you put yourself in a harsh predicament if you have multiple late payments. Late payments have the strongest effect on your report the first three years.
Avoid Missed Payments When Possible
Experiencing missed payments isn’t the end of the world when you’re in a financial bind. If you ever find yourself in this situation, you should find ways to get current on your payment.
Rather than panicking and avoiding your lender, be open and speak with them to resolve short-term problems. This will help avoid unwanted foreclosures. If you enjoyed reading this article, check out more informative blogs on our website.