Being a homeowner is a challenging endeavor, that is only made worse if you find yourself in a tough financial position where you are late on your mortgage payment. I just had a tough call with a potential client who was in this specific situation, although technically they had missed 2 payments, but I thought I would get back into the details as to what you should expect should you happen to miss a mortgage payment or two.
The first thing to realize is that every lender is different, just as the laws for each city and state are different, so these guidelines will be a little more broad to account for that case by case nuance that is missing from this exercise. If you are reading this and you are facing this type of a situation, then simply give me a call at 267-984-4765 or fill out a form on this page and I can discuss your specific details and provide you with more relevant information. You can also find additional information on what options you have to avoid foreclosure as well as what to generally expect from your bank when facing foreclosure.
With that being said, let’s review a basic timeline when it comes to missed mortgage payments.
What to Expect If You Miss Your Mortgage Payments
First Missed Mortgage Payment: 30 Days
Typically, most lenders will allow for some slack in regards to a first missed payment. Most banks provide up to a 15 day grace period to allow for the occasional missed payment. In this grace period, you typically don’t see any late penalties applied nor will you typically see any real repercussions, instead it is typically just some standard notifications from your bank attempting to remind you to make the payment.
If you miss those reminders or simply can’t pay the bill, at about the 30 day mark is when more mortgages will have some type of late fee, normally I anticipate late fees to be around 5% of the monthly installment payment. You will also see a drop on your credit score, as this will be reported and it will have a big negative impact on your credit score.
At the 35-45 day mark, the bank is going to start to make this more of a priority. They will start reaching out trying to find out what is going on for you and if there is anything they can do to help you get back on the right track with regards to your mortgage payment. This is a great time to talk to your bank and let them know what you’re facing. They may be able to work with you on things like a loan modification.
REMEMBER: The bank does NOT want to go through foreclosure either! It is a lot of work and money for them. It is WAY easier and more profitable for them to work with you to get you to start making your monthly payments again.
Second Missed Mortgage Payment: 60 Days
Just as it was the case at the 30 day mark, when you miss your second payment in a row, there will be another late fee and negative credit score impact. The bank will be reaching out more regularly, if they are not already in contact with you, and things will start to get a little more tense and deadline focused.
At this point, it might be most prudent for you to start considering selling the property entirely so that you can walk away from the house with minimized impact on your long term borrowing future.
Third Missed Mortgage Payment: 90 Days
At the third missed payment, you again will have the negative credit score impact as well as another late fee. I have talked with a couple of homeowners who hit this point and everything started to feel hopeless, as their initial problem has snowballed into this massive avalanche of issues. They didn’t have the money to make 1 payment, and now the bank is demanding that they pay close to 350 times as much just to get caught back up.
What’s worse is that this is when the bank will start the foreclosure process. They will send you a letter letting you know just how much you need to pay them in one lump sum in order to avoid foreclosure. This payment is typically due prior to the 120 day mark.
Fourth Missed Mortgage Payment: 120 Days
You guessed it, another missed payment so we have another late payment fee as well as a negative credit score impact. Additionally, now you are going to be in the beginning stages of foreclosure. This might take a couple of weeks, or it could take months to complete. It really depends on your location and contracts.
It might just be easier for you, if you’re worried about missing payments or potentially facing foreclosure, to simply get off of the property before you start seeing the negative effects.
No matter what condition your home is in, how much equity you have in the property, or whatever work the house may need, we can buy your house and provide you with terms that work for your specific needs. Reach out to us at any time and see how we can help you!