When Will Late Mortgage Payments Hit Credit Score?

Hey guys, this is Mike from Mike Buys Houses. I was speaking with a homeowner and he was asking me, when is a missed mortgage payment reported to his credit report as he had just missed a payments and it was still not showing up on his statement. So, we talked about what that timeline looks like and I thought I would share here as well.

Mortgage Payment Late Fees

First thing is, if you do miss a mortgage payment, expect to have to pay a late fee when you do end up making the payment. Typical late fees are anywhere from 3% to 6%, but they will only kick in if you haven’t made a payment within the grace period. Most mortgage companies will give you five to ten days in order to make a payment without applying that late fee. After that initial grace period, they will start to apply the late fees.

I have even seen instances where, over time and with enough missed mortgage payments, those late fees accrued at the tens of thousands of dollars! So, it is definitely to keep tabs of and something that you want to get ahead of as early as possible. 

So again, you will be looking at roughly 3-6% for the first month, but it is going to accrue each and every month.

Credit Score Hit

As far as an actual credit score hit, the most important thing to remember is that most banks don’t actually consider a mortgage payment late until the 15th and then 30 days after that is when they are allowed to apply that missed payment to the credit report. So, sometimes it can take up to 45 days to see it on your report, depending on your bank and specific mortgage documents.

Somewhere in that 30 to 45 day window is when you should expect the credit hit to show up. Once it does, keep in mind that 35% of your credit score is dependent on on-time payments. So, those missed payments are going to really negatively impact your credit score, and that will last for seven years on your report.

Steps for Prevention

The first step to take if you know you have already missed a mortgage payment or if you think you are going to miss a mortgage payment or even if you think you might miss a string of payments, is to reach out to your bank. They probably will have some documents that you can fill out in order to look for forbearance or a loan modification, based on your situation.

The other thing you can do is sell the property, again, depending on your situation and the condition of the home. You can potentially list it with a realtor, who can help you get top dollar, but you need to balance how long that can potentially take to close. You might miss quite a few mortgage payments in the time it takes to sell the property.

Sometimes conventional closings can take up to three months, so listing with a realtor may or may not make sense for you. If you want to find out if this makes sense for you or not, feel free to reach out to us at 267-984-4765 or fill out the form below. We can go through your options.

Mike Buys Houses Advice

As I mentioned above, we would love to go over your options with you. I tell homeowners all the time that we will only give advice, never advertise for ourselves. We may not be the buyers for you, but we’re going to give you all of the options you have available to you. 

Check out our video on 8 options to prevent foreclosure, because when you reach out, we will basically go through that list with you to find out what options you have. We will check step one and if that will work for you. Then, step two. Will that work for your situation?

One of those steps is sell with a realtor as well, so we will definitely discuss it with you and assess if you can make more going that route. Once we get through all of the steps, we can see if we might be buyers for you. So, no matter your situation, we are absolutely going to be able to help out.

Give me a call at 267-984-4765 or fill out the form below and we’ll reach out to you!

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