Having a mortgage is a significant responsibility. Owning a home offers a great sense of security and stability for your family. Unfortunately, until your mortgage is paid off, that home isn’t technically owned by you. Monthly mortgage payments slowly chip away at the balance owed on the house until one day, it’s paid off and wholly owned by you. A skipped mortgage payment is something you never plan for, but knowing what repercussions you could face for a missed payment is part of being a homeowner.
1. Credit Consequences
A missed mortgage payment could impact your credit in the long term. Your mortgage lender could report your missed payment to the credit reporting bureau. Late payments on your credit report will lower your credit score. This could make it more difficult to borrow from lenders and open new credit lines.
Don’t assume one skipped or late payment will ruin your credit, though! Most mortgage lenders offer a grace period. This allows you to make a late payment without harming your credit, as long as it’s paid during the grace period. The grace period for your mortgage is up to the lender, but it’s usually around 15 days. Some lenders even offer the option to defer payment and add it to the end of the loan without reporting it as a missed payment.
2. Will I Face Foreclosure?
You don’t need to stress about losing your home to foreclosure after one missed payment. It technically takes two missed payments for the foreclosure process to be started, but most lenders don’t take action until the third missed payment.
3. Higher Interest Costs During the Life of the Loan
Even if you aren’t facing foreclosure or a bad credit score, the missed payment amount will continue to gain interest until it’s paid. Ultimately, you’ll end up paying more for the life of the loan than you would if all your payments were on time.
Increased interest over the life of the loan is an issue that affects your future self more than your current self, though. Everyone goes through unexpected hardships, so don’t stress too much!
4. Tips to Keep Your Mortgage Payments Current
The best way to avoid a missed mortgage payment is to live life on a budget. No matter how high your income is, it would help if you had a plan that accounts for where every dollar is going.
Using a budget spreadsheet is a great way to calculate your monthly expenses versus your income. This allows you to subtract bills, savings, and spending money from your income. Try to set a little aside in savings on each check. Then, if you’re in danger of missing a mortgage payment, you can make the payment with your savings.
Contact Blackstone Williams Today
Experts also recommend setting mortgage payments up for auto-pay each month, so you never forget to pay. Contact us today for more tips on keeping your mortgage current and finding the home of your dreams! You can get started by calling us at 571-926-5388 or filling out a contact form. I look forward to hearing from you soon!
