So you got a “mortgage late.” You thought you paid your mortgage on time, but for some reason the bank or loan servicer never got your mortgage payment.
It happens every day. Homeowners fail to pay their mortgage on time for one reason or another. I’ve heard every excuse in the book as a former Account Executive. Unfortunately, most fall on deaf ears.
Typically, mortgage lates occur when homeowners are between homes. It’s understandable when you move from one home to another, paying off one mortgage and acquiring a new one.
But you need to be extremely careful during that period to ensure everything is paid as agreed.
Again, any excuse you throw out probably won’t cut it, even if it was someone else’s fault, which it often is.
Mortgage Lates Will Sink Your Credit Scores
- Late mortgage payment(s) must be 30+ days past due to impact credit scores
- If you’re only a few days (or even weeks) late you’ll likely only have to pay a late fee
- So it typically doesn’t happen by accident
- Impact will vary based on credit history and number/severity of late payments
Aside from having to pay any late fee associated with the overdue payment, you’ll also see your credit scores sink big time if you’re 30 days late (or more) on the mortgage.
Depending on where your scores stood prior to the mortgage late, they could fall anywhere from 60 to 100+ points.
After 30 days, this delinquency information is relayed to the credit reporting agencies, at which point the damage is done.
[When are mortgages due?]
Simply put, mortgage lates severely damage your credit score. And mortgage lenders and banks aren’t particularly keen on lending to homeowners who couldn’t pay their home loan on time in the past.
However, because of the frequency of mortgage lates committed by homeowners in recent years, some mortgage lenders and banks now allow one 30-day mortgage late in the past 24 months before a subsequent home loan application. So there’s a bit of leeway.
Unfortunately, that only allows you to be late on the mortgage once in the last two years.
What happens if you miss your payment more than once, or get a “rolling late,” which essentially counts for two late payments?
Or if you get a 60-day late, or worse? What do you do? In most cases, you’ll probably be denied a mortgage.