Written By The Simply Homes Team | August 11, 2023 | 3 minute read
Being unable to meet your mortgage payment schedule is an experience shared by more Americans than you might expect. In 2021 alone, nearly five million American homeowners skipped at least one mortgage payment, and with the current mortgage rates, maybe you find yourself in the same predicament in 2023, rest assured you're not alone. There are steps you can take to mitigate the situation. Equally crucial, though, is understanding the potential fallout from delayed mortgage payments.
Your mortgage payment is not instantly considered late if it's only a day past due. Lenders usually offer a grace period of 15 days before late fees are incurred, which are usually around 4% to 5% of your monthly payment. Within this 15-day grace period, even though the payment is technically late, it's not reported as such. The delinquency isn't officially reported until 30 days past due. Hence, it's advisable to pay your overdue mortgage within this initial grace period.
Being late by 30 days isn't the only instance you'll incur a fee. The longer your payment is delayed, the more fees are accumulated, increasing your repayment cost. Once you're a month late, your missed payment is reported to the credit bureaus, causing your credit score to tumble. This drop in credit score restricts your ability to secure additional credit. If your mortgage payment is overdue by more than a month, it will be reported every 30 days.
If you can't settle your mortgage payments within 120 days, your lender has the right to initiate foreclosure proceedings. At this point, options such as a loan modification or bankruptcy filing might be possible but not guaranteed and could prove more costly.
It might seem obvious but, if feasible, aim to repay your loan as quickly as possible. Even with late payments reported to credit bureaus, it's still worthwhile to rectify the situation. Mortgage providers are often willing to negotiate various repayment plans. The sooner a plan is in place, the better your chances of avoiding foreclosure.
In case repayment might not be an option, selling your home might be the only way around this situation. However, being late on payments complicates this. Instead of selling via traditional channels, your mortgage lender might only accept short sales, an offer less than your outstanding mortgage. Though the lender may sometimes forgive any remaining balance, this is not always the case, and a short sale negatively affects your credit score.
If a short sale seems disadvantageous, selling your home for cash could be the solution. A cash sale can potentially clear your loan balance at once, leaving you with some cash to restart. This route also saves you from marketing, additional fees, and protracted closing periods.
If you're late on your mortgage payments, Simply Homes can offer you the lifeline you need. We will buy your home for cash, circumventing the hassle, long closing times, or extra fees. Don't let things escalate; take control of your situation instead. Get your offer today and start your journey to financial recovery.
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