Homeowners are aware that a late payment on a mortgage can negatively affect your credit. But, most homeowners are not exactly sure when their mortgage payment is late, and when the penalties start. Usually, mortgage payments are due on the first day of the month. So, if the payment is received on the second day of the month, the payment would technically be late. However, lenders usually give a grace period to borrowers up to 15 days. So, the lender does not consider payments received on or before the 15th day of the month late.
15 Days Late
Once your payment is 15 days late, the grace period expires. You will then receive a late notice from the lender, and will be assessed a late fee. Once you receive a late notice, it is in your best interest to act quickly. If the lender does not receive your mortgage payment in a week or so, you will receive more letters and telephone calls.
30 Days Late
If the lender does not receive the payment by the last business day of the month, your account is reported as late to credit reporting agencies. Even if the last day of the month ends up on a weekend, the lender considers the payment late because the they did not receive the payment by the last business day. Also, if a month has 31 days and the last business day of the month is the 31st, the lender most likely will not report you 30 days late for a payment received on this date.
Longer Than 30 Days
Often, borrowers end up being more than 30 days late due to financial difficulties. Each month a payment is late, a borrower's credit score is increasingly negatively affected.In addition, penalties and interest accrues on the loan, so the amount to bring the mortgage current is increasingly higher. When you are 90 to 120 days late, the situation becomes much more serious. Depending on state law, a lender may begin the foreclosure process. Once a lender issues you a Notice of Default, your foreclosure situation essentially becomes public.
To ensure receipt of your payment via mail, you can send your payment certified mail or overnight delivery, so a person's signature is required as an indication of receipt. Most lenders also offer an option to pay by phone, automatic draft or via the Internet. These options offer assurance that your payment is received in a timely manner. If you are late on a payment, and you know you can make it up in the short term, your credit will only take a slight hit. However, if you determine that you are in a situation that is dire, you may have to contact your lender to see what options are available to assist you.
The terms of your mortgage may be different from the terms outlined. Contact your lender to find out the exact terms of your mortgage, including specifics such as grace period, when your mortgage is considered late and at what point late payments are reported to the credit bureaus. In addition, your lender can let you know the available avenues to make payment. You can also read your loan documents, if you prefer.
Seanna Wesson is a licensed Realtor who has been writing since 2009 for Free Real Estate Advice and other websites. Her expertise includes personal finance, small business and real estate. She holds a Bachelor of Business in management information systems from University of Texas-Austin and a Master of Business in finance and a Master of Science in real estate from University of Texas-Arlington.