Buying a house is an exciting time in your life, as you search for the place you will call home for the foreseeable future. However, there is also a lot to learn and educate yourself about when shopping for a home. You need to know the mortgage loan process, familiarize yourself with what to look for during inspections, and more.
In addition to that, it is also crucial that you educate yourself on things or issues that may come about during your experience as a homeowner. For example, you never know what the future holds for you, and it is always good to know what happens if you were to miss a mortgage payment.
With that in mind, this article is going to look at some of the facts about what happens if you miss a home mortgage payment.
Your Credit Score Will Suffer
One thing that is sure to happen if you miss mortgage payments is that your credit score will suffer. A good credit score free of hard inquiries is important for getting a car loan, or buying a home, and will help get better rates and terms when borrowing money. The better your score, the more comfortable lenders will generally be working with you.
The hit to your credit will occur when your lender reports the missing payment to the various credit bureaus. This will normally take place once the payment is over 30 days late. While your credit score and overall credit health are about more than simply making payments, payment history does play a large role, so you could see a dramatic decrease in your credit score if you’re not careful.
You Will Be Responsible for Late Fees
Another thing that will occur if you missed a mortgage payment is that you will be responsible for late fees. The amount you will have to pay can vary, but will often be somewhere in the range of 3 to 6 percent of the payment.
However, you will often have a grace period of a week or two to make any late payment in full before beginning to accrue a late fee. But once this passes, your lender will be able to issue a fee.
As for the exact amount of time that needs to pass before you begin being responsible for late fees, it depends. Many lenders will charge one as soon as the grace period ends and then may continue to add additional late fees the longer the payment goes without being made. These can add up quickly, and your missed payments can soon become very expensive.
You Could Lose Your Home
If things get serious, and you go months without making a payment, there is a chance you could lose your home to foreclosure. First, after about 90 days you will get a demand letter, in which your lender will essentially demand you begin making payments (and paying the ones you missed) or foreclosure proceedings will begin.
A foreclosure is when the bank/lender will sell your home to recoup their money since you are no longer paying. If your mortgage still remains unpaid for another month after this letter, the lender will generally schedule a foreclosure sale, and you will end up losing your home in the process.
In conclusion, we hope that this guide has helped you learn a little more about what may happen if you miss a home mortgage payment. It is important to always do your best to make your payments on time and in full.