Failing to make a mortgage payment sets off a chain of events that can ultimately lead to foreclosure if you don’t bring your loan current. Here’s what happens when you miss a mortgage payment.
Late Mortgage Payment Definition
Exactly when a mortgage payment is considered late depends on your servicer’s policy. Most consider a payment to be late if it’s received after the due date printed on your statement. In some cases, payments are only late if postmarked or electronically submitted after the due date, and there may also be exceptions when due dates fall on Sundays or holidays. It’s smart to know exactly what applies with your servicer. Paying a day or two late doesn’t always trigger consequences, though, because mortgage servicers frequently offer a grace period. In fact, many states require them to do so.
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Mortgage Grace Period
The grace period gives you some wiggle room to make a slightly late payment without incurring penalties or damaging your credit. Grace periods are usually 15 days. If you pay within that time, you won’t owe a late fee, and the payment won’t be reported to credit bureaus as late.
Toward the end of the grace period, your servicer may contact you to find out why you’re not paying.
When Does a Late Mortgage Payment Get Reported?
Mortgage servicers generally report accounts to credit bureaus every month. If you pay your mortgage more than 30 days after the original due date, the account will mostly likely appear on your credit report as past due.
Getting a payment to your servicer a day late isn’t necessarily a big deal, especially if you have a grace period. But significantly late payments can have a serious impact on your credit. The consequences become more severe every 30 days.
10 Days Late
At 10 days past your due date, you are likely still within your grace period, so you don’t yet incur any fees. However, your servicer may start calling to ask if you’re having difficulty paying your mortgage.
“Their job is to reach out to that borrower and find out what the life-altering circumstances are. There are options for borrowers that are unable to make their mortgage payments,” says Candice McNaught, senior vice president of business development and strategic initiatives at Planet Home Lending.
Your servicer might offer a forbearance agreement or another loss mitigation plan to address any hardship you’re experiencing.
15 Days Late
On Day 16, the 15-day grace period expires and a late fee will apply. In many states, the fee may be as much as 5% of the past-due principal and interest. Your late fee must be listed on your Truth in Lending disclosure.
30 Days Late
If you haven’t made your payment or reached an agreement with your lender, your payment may be reported as late to the credit bureaus on Day 31. According to data from MyFICO, a consumer with a low FICO score would lose about 20 to 40 points, while someone with a really high score could lose 60 points or more.
36 Days Late
Federal law requires your loan servicer to “make live contact” or at least a good faith attempt to get in touch with you about your delinquent mortgage. The servicer must inform you about any available assistance that applies to you. The servicer is required to contact you every time your payment is 36 days late.
45 Days Late
Your servicer sends you a notice of delinquency. This document states how long your account has been past due and how much you need to pay to get caught up. It also includes information about housing counseling and informs you of the consequences of defaulting on your mortgage.
By now, your servicer is regularly attempting to contact you by phone and email to discuss your options.
60 Days Late
You continue to incur late fees each month, and your account is reported as 60 days past due on your credit report. Your credit score drops again.
90 Days Late
The account is reported as 90 days past due, further lowering your credit score. You’re charged another late fee.
At this point, the servicer is likely to start the foreclosure process. You receive a demand letter notifying you that the servicer intends to accelerate the mortgage. Additional charges, including legal fees and fees for inspections, begin piling up .
“This might be a drive-by property inspection. Somebody drives by the house to make sure that somebody’s still living in that house. If they see that the grass is mowed or the walks are clear, they know that’s happening,” says Russell Graves, executive director of the National Foundation for Debt Management.
If the property isn’t in good repair, the servicer may order work on the home and charge you more fees to cover the costs. These fees can amount to hundreds or thousands of dollars.
You have 30 days from the date of the demand letter until the servicer initiates foreclosure. To prevent foreclosure, you’ll need to “cure” the mortgage by paying the entire past due amount, including all fees. The servicer will probably not accept partial payments unless you’re in a workout plan or loan modification program.
120 Days Late
When you’re four months behind on mortgage payments, the servicer can begin foreclosure proceedings. In states that require judicial foreclosure, which takes place in court, it may take several months to several years to complete, depending on where you live. (In Louisiana, for instance, foreclosures completed in 2024 took an average of 3,015 days.) In states that allow statutory or nonjudicial foreclosure, the servicer can auction off the property itself. That process typically takes less than six months.
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How Bad Are Missed Mortgage Payments?
Payment history accounts for 35% of your credit score and is the most important credit scoring factor. So missing a mortgage payment can seriously hurt your credit. How much your score will drop depends on the length of your credit history and whether you’ve had trouble paying bills in the past, but you can expect a steep decline.
A lower credit score can make it harder to qualify for credit cards or loans. If you do qualify for credit, you’ll likely be offered a lower credit limit and charged a higher interest rate. The insurance premiums you’re charged could also increase if your score drops.
If you miss a mortgage payment, you’re likely to have real trouble refinancing for at least six to 12 months, which may cost you the chance to save money on your loan.
“You don’t want that to prevent you from being able to purchase another home or having an opportunity to refinance down the road,” McNaught says.
Here’s how long you have to wait after a missed payment to refinance with major loan programs:
— Fannie Mae RefiNow. It must be at least six months since your last missed payment, and you can’t have more than one missed payment in the last 12 months.
— Freddie Mac Refi Possible. It must be at least six months since a payment was 30 days late, and you can have at most one 30-day late payment in the last 12 months. No 60-day late payments in the past 12 months are permitted.
— FHA rate-and-term refinance. It must be at least six months since you’ve made a late payment on the mortgage you’re refinancing, and you can have at most one 30-day late payment on any other mortgage in the past six months.
— FHA streamline refinance. You can’t have late payments in the past six months, and you can have at most one 30-day late payment in the last year.
— VA interest rate reduction refinance loan. Your loan can be 30 days or more past due, but the loan must have been previously “seasoned” with six consecutive on-time payments.
— USDA streamlined and nonstreamlined refinances. It must be at least 180 days since your last missed payment.
— USDA streamlined assist refinance. It must be at least 12 months since your last missed payment.
If you miss multiple payments, you can lose your home through foreclosure. A foreclosure appears on your credit report for the next seven years.
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What Should You Do if You’re Going to Miss a Payment?
Your mortgage is one of your most important bills because it keeps a roof over your head, so paying on time should be a high priority.
Margaret Poe, head of consumer credit education at TransUnion, recommends letting your credit card or other less-important bills go if necessary to make your mortgage payment on time, then catching up the next month. “It’s not ideal,” Poe says. “No one likes paying interest, but sometimes people have to make hard choices. So we really do recommend avoiding a missed payment if you can.”
Sometimes, though, emergencies come up, and it’s simply not possible to pay your mortgage on time. In that case, it’s far better to contact your servicer before you miss a due date rather than trying to explain yourself afterward.
“Letting a servicer know in advance before that time, before you’re late, always is a good thing. Calling your servicer, saying, ‘I had a flat tire. I needed to get a new tire. I’m going to be a week late with my mortgage.’ Your servicer is going to work with you,” Graves says.
If you’ve experienced a hardship that’s making it difficult to pay your mortgage, your servicer might offer one of the following options:
— Forbearance. You make smaller payments or take a break from making payments while dealing with a hardship. Later, you resume payments and arrange to repay the amount you missed.
— Loan modification. The servicer makes changes to your loan. This can mean lengthening the repayment term, lowering the interest rate or reducing the principal. Going forward, your payments are more affordable.
— A repayment plan. You make larger than usual monthly payments for a time to make up for the payments you missed. The servicer might set up a repayment plan after your loan exits forbearance.
Consider reaching out to a federally certified housing counselor for help communicating with your servicer. Your counselor can call your servicer with you on the line to explain your situation and help you understand your next steps.
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What Happens if You Miss a Mortgage Payment? originally appeared on usnews.com
