Some circumstances beyond your control can make it difficult to meet your mortgage payment obligations. But you should always try to contact your lender and discuss available assistance options.
Most lenders have a grace period for mortgage payments before they charge you late fees. But missing one or two payments can still affect your financial future and put you on the path to foreclosure.
Foreclosure
The goal is to prevent missed payments by having a strong emergency fund, keeping a solid household budget and ensuring your credit score remains healthy. But, if your mortgage payments do fall behind, it's important to reach out to your lender right away for help.
In most states, after a borrower misses three payments, their mortgage loan servicer will send what's known as a Demand Letter or Notice to Accelerate, which serves as a notice they have 30 days to pay their mortgage balance so it's current or face foreclosure proceedings. The specifics of foreclosure processes vary by state, but most involve a legal process of selling the property to recover the debt and costs.
Some lenders offer options like deferring mortgage payments, repayment plans and loan modifications. While these are a good first step, it's still critical to be open with your lender, establish a budget, explore government assistance programs and seek professional financial advice.
Damage to Your Credit
Mortgage payments are unsecured debt, meaning they're not secured by any collateral (like a car or house). This means lenders can report missed payments to credit agencies, which hurts your credit score and makes it harder to get loans in the future.
If you miss a payment, the lender must send you a letter notifying you of the missing payment and charging late fees. Your lender will also assign a staff member to your mortgage account to connect you with available assistance options.
While it's easy to panic after a missed payment, the best course of action is to contact your lender as soon as possible. Lenders are more likely to offer help if you reach out early, and they can often arrange for a repayment plan that won't damage your credit. They can also refinance your mortgage into a new loan with better interest rates and terms, which won't impact your credit score as much as foreclosure.
Refinancing
As a homeowner, the best way to avoid mortgage payments is to have a strong emergency savings fund and make sure your household budget is balanced. However, life circumstances sometimes get in the way. When that happens, it’s important to understand the consequences of missed mortgage payments and how to respond appropriately.
Mortgage lenders typically report late payments to the credit bureaus once they’ve accumulated 30 days of delinquency. Payment history makes up 35 percent of your credit score, so even one missed payment can hurt your rating significantly.
Depending on the circumstances and your lender, you may be able to work out an agreement to get back on track. For example, some programs allow you to apply for mortgage forbearance, which suspends or reduces your monthly payments for a specific period of time. During that time, your lender will likely contact you to discuss repayment plans and other options. You may also be able to refinance, which can help lower your mortgage costs and make it easier to manage your payments.
Damage to Your Home
Sometimes, a mortgage payment miss can occur for a variety of reasons. While it's always preferable to pay your bills on time, we understand that life can get in the way of the best intentions. If you think a servicer made a mistake or charged you a fee you don't owe, make sure to correct the issue as soon as possible, but keep making your payments -- even partial ones.
After your first missed payment, most mortgage lenders will report it to credit bureaus, which can negatively affect your credit score. The lender will also likely reach out to you in writing, and may initiate pre-foreclosure proceedings (if you live in a mortgage state) or demand letter/notice to accelerate (if you live in a deed of trust state). Fortunately, most mortgage lenders will be willing to work with borrowers to provide loss mitigation options, such as loan modification, forbearance, or repayment plans, which can help avoid foreclosure.
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Our customer service agents are trained to help you out in the best way possible and remove whatever stress you may be feeling.
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We can move quickly and purchase the property within a very short time (sometimes taking as few as seven days to close the transaction).
Just follow the first step above and we will soon send you an offer.We buy properties in most situations and we typically buy houses in any condition.
Our customer service agents are trained to help you out in the best way possible and remove whatever stress you may be feeling.
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We can move quickly and purchase the property within a very short time (sometimes taking as few as seven days to close the transaction).
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Our customer service agents are trained to help you out in the best way possible and remove whatever stress you may be feeling.
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