A mortgage is a loan that you take to buy a home or any real estate from a bank or a similar financial organization. A mortgage is used to pay for the complete cost of a house If you don’t have any cash immediately available. The amount of payment you make every month equivalent to the amount you owe to the bank is your mortgage payment.
There are Four components of a mortgage payment which are Principal, Taxes, Interest, and Insurance. If your monthly mortgage payment is received 30 days past the due date, then It is considered late. Late fees and penalties are applied by the financial institutions If It’s paid after the date required for the installment.
Courtesy Period
In all the home loan documents provided by the bank or the financial organization that gave you the mortgage, there is always a time mentioned called the Courtesy period or also commonly known as the Grace Period. Most companies give you a fifteen-day length for your next installment which is your grace period. This means no penalties or fees would apply to you missing your monthly payment on the due date.
Effects of Late Mortgage
A late mortgage If not taken seriously might badly affect your overall financial state and credibility.
Most organizations provide you with a 15-day grace period but once that’s over, a late fee for the missed installment is demanded. If the payment gets 30 days late, then the organization in addition to your late fees is liable to report your late payment to your credit company dropping you in credit points.
Further late payments require the loan giver companies by law to contact the loan taker by phone call or through a meeting to discuss their payment methods and how to modify them. Another 30-day mark, which is 60 days to the first installment and you missed another installment, then you get another late fee ticket.
This late fee is a considerable amount which makes it difficult for a lot of people to make up their mortgage on time for the upcoming months. If It hits a 90-day mark then warnings for shutting out the property may proceed. And on the 120th day, the closing procedure of the property will commence.
Quick Fixes to Late / Missed Mortgage
Fortunately, with the help of some quick actions and financial advisors, there is a solution to your mortgage payments. With some discussion with your house advisor, you can choose the steps you want to take regarding your mortgage penalties.
- If you were somehow late to pay your mortgage then It might hit your credit score from 60 to 100 points. After paying your mortgage, you have to call or email your mortgage establishment and ask to remove the late mortgage from your credit history. This will most likely keep your credit score intact and make you eligible for any possible further loans. Because banks or loan companies do not give loans to people with low credit scores or late mortgages stamped on their credit reports.
- If you could not make your mortgage payment on time or missed it, with the help of a discussion with your financial advisor you can opt for Mortgage modification which makes your lending organization fix the terms and penalties of payment and make monthly installments affordable for you.
- If you cannot somehow pay your mortgage on time, you can ask the bank or the loan-giving organization to give you Forbearance. This means, If accepted they will suspend or postpone your payments for a few months, maybe even six months so you can get back on track with your financial situation. But you will have to pay back this amount, even the one you have to pay during the forbearance period, in due time.
- You can also ask the mortgage company to change the plan of your mortgage payment according to your credit score, which will make the monthly payments easier.
- As a last resort, You can also sell or rent your house to make up for the loaned amount of mortgage If you find it suitable to make up for missed mortgages.
Conclusion
Late mortgages are a nightmare for people who are living on bank loans and facing financial pressure. If you plan to buy a house or mortgage then try to pay it in due time because the consequences and penalties get more difficult to deal with every passing month. Paying your monthly mortgage can give you financial stability and peace of mind, and will also make sure to keep your credit score intact.