The Truth Behind Late Mortgage Payments: How Being Behind on Payments Can Affect YouIt is important to realize that repossession is a bank's last resort for dealing with a home-owner who is consistently unable to make their monthly mortgage payments. Being behind on payments, even recurring and consistently late payments, (as long as they arrive at some time before the next payment) will only result in negative items on your credit report. So, if you are only late on your second or third mortgage payments, you can rest a little easier. But, let's try to get your payments under control in hopes of avoiding penalties.
When is Your Payment Considered Late?Mortgage payments are typically due on the 1st of the month, however most lenders offer a grace period of two weeks. Therefore, your payment is considered late as of the 15th. This is when penalties start to kick in. When the grace period ends you will most likely receive a 15-day late payment notice, and a late fee added to your bill. At this point you likely have another week to act before you receive a subsequent letter or phone call. Don't let it get that far. When you receive the 15-day late notice a note has probably been made in your credit report.
If a late mortgage payment isn't received within 30 days of the due date you can be sure the credit bureaus have been alerted and your credit score has suffered. Depending on the month, you may have 30 days, or 31 days from the original due date before this action is taken. If you happen to be incredibly unlucky and you find yourself in a bind in February, which only has 28 days, you will have two days less to act.
How to Avoid Foreclosure
If you are unable to make consecutive payments the bank has complete authority to seize your home. Though typically people who fall behind on payments tend to fear the bank, and thus ignore or avoid contact with the banker, or agent in charge of their loan, one of the best methods to avoiding foreclosure is to remain in close contact with this person. Bankers have feelings too, if you give them a human being to talk to instead of an answering machine, they are much more likely to negotiate or be lax about penalties. Many times they will delay repossession to give you more time if you just place a simple phone call.
Obviously the best tactic to avoiding foreclosure is to avoid late mortgage payments all together. If you are struggling to make enough money to make the payments, (like so many
Florida home-owners have) discuss
mortgage refinancing options with your bank. Refinancing allows you to renegotiate with the bank and find a payment plan that you can manage reasonably. It is important to realize that banks don't want your house, it's just more work for them to then try to sell it. They really just want the money that is due to them. Banks are willing to work with you to resolve your debt, if you are willing to work with them. Honestly, this is the only way both parties win. They get their money, you get your house.
The easiest way to avoid all this hassle is to use
money-managing techniques. Create a spending budget. Calculate exactly the amount of money needed to pay off all bills, and before you start spending money from your paycheck set that amount aside. Then with the rest, create a spending budget, and put some in savings in case of an emergency. When you don't know how much money you can afford to spend, or you spend more than you make, you obviously start getting into credit and debt problems. Paying bills on time, and responsible money management, are the best sure-fire ways to avoid debt and foreclosure.
By: Javi Calderon
