From client info, applications, communications, mortgage industry news, marketing ideas, to social media and more, it seems like I'm reading all the time these days. The gathering (and sharing) of info is vitally important for an LO.
But as many have found ... and is being energetically discussed currently ... the info found on social media can be a mixed blessing. An unbelievable wealth of valuable info is out there, but then there's a whole lot of ... well, let's just call it "unreliable and erroneous" info too.
When that unreliable incorrect info is financial, credit, or lending in nature, it can have consequences. And it definitely catches my eye, so I try to address this issue head-on by blogging and sharing the correct facts. As you probably guessed at this point, something I recently read did just that and it motivated me to write this post. What was it? It was a tweet containing a link to info regarding late mortgage payments.
The source of the info shared within the tweet was a very visible well-known organization. One relied upon heavily by professionals within our industry and consumers alike.
Now I believe it's likely that many read the info contained in the tweet's article. They probably assumed the info was correct.
Being kind, I'd say the info provided within the tweeted article misleads consumers into:
Thinking the damage done to their credit by a late payment could be minimal or easily absorbed
Being lulled into a false security. One that possibly keeps them from making an immediate/needed payment
Not taking immediate action of any kind
Consumers need to know that ...depending on the consumer, the consequences felt from a late payment could range from mildly damaging to severe.
What the article in question did not address was two-fold:
1. The article did not stress strongly enough that, like many other facets of credit and mortgage financing, the damage wreaked by a missed mortgage payment can vary greatly between one consumer and another.
For that reason, it's vitally important that anyone about to miss a mortgage payment talk to their Loan Servicing Company, or YOUR Personal Mortgage Lender, immediately. That way they get personalized factual info and guidance in order to move forward ... but to also lessen any credit damage that might be done.
If a consumer is hoping to finance a new home in the near future: The need to talk to a Lender regarding any late mortgage payment(s) becomes even more intense.
The TIMING (and success) of any future mortgage application could rely heavily on how recently a late mortgage payment was made. Again, a Lender can provide timely info and guidance that will best assist in securing better credit health and future mortgage approval.
2. The tweeted article also did not raise this important fact: Depending on the type of loan being applied for, underwriting rules regarding mortgage approval can vary.
Example: What is true for Conventional Mortgage underwriting/ applications varies from those of FHA underwriting/ applications.
Now you know why I always say it's so important to seek the expertise of a Mortgage Lender. One that understands credit issues fully and has experience in dealing with them successfully.
With that said, below you will find some very basic answers to the following questions regarding Late Mortgage Payments:
1. What constitutes a late payment?
First, it's important to understand the difference between an overdue payment ... and one that is actually late.
An OVERDUE payment:
Most Lenders or mortgage servicers provide you a "grace period" in which you can still make your mortgage payment without actually being considered "late".
Mortgage payments are typically due on the 1st of each month, with a grace period extended you of approximately 15 days. You may be assessed a penalty for making your mortgage payment during this grace period, but most likely you are not in danger of being reported to the credit bureaus.
A LATE payment:
A payment is considered late when it is not made within the month it is due. (That means actually in the possession of the Lender/mortgage servicer, not the postmark or "sent" date of a check or payout from your bank.)
2. When do Lenders report a late payment(s) to the Credit Bureau?
Lenders typically report late payments to the credit bureaus once they are 30-days past their due date.
3. How does a late payment affect your Credit Score?
Here is where the asterisks start flying and the individual consumer's personal credit history becomes so important. Why?
The credit standing you hold prior to your late payments influences how much a "hit" you receive to your credit scores. Plus, the more/longer late payments reported, the more severe your credit is affected. The recipe for the "hit" is very personal to your individual debt and credit.
4. How does a Mortgage Underwriter typically view a late payment ... and can that late payment affect Mortgage Approval?
Ironically, when in the mortgage process, the more recent the 30-day late payment is, the more damaging it is to your credit ... and the more likely it is that it will hurt your chances of receiving mortgage approval to buy (or refinance) a home.
Remember I mentioned above that the type of mortgage you apply for dictates how Mortgage Underwriters will view late payments? I refer to the "recipe" concept once again here.
The credit standing, debt, and finances of each consumer applying for a loan are unique to them. The same can be said as to the results reaped by a late payment(s).
All of the above only highlights even more (yes, I stress it once again) the absolute need to work with an experienced LO during what is a more challenging mortgage application.
And it only elevates the importance of sharing correct information with consumers, as the mortgage process can be confusing enough without consumers and future mortgage applicants receiving old, untimely, or erroneous information that does not pertain to their specific borrowing scenario.
For the best results, answers to your questions, most personalized facts, guidance, and assistance ... reach out to a Lender. Whether it be for information regarding your credit or late payments. Whether it be about buying a new home or refinancing your current one.
Don't hesitate and don't wait ...
* When in need of Mortgage info or service when buying or refinancing a home in New Lenox - elsewhere in Chicagoland - IL & WI,contact me. I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
I'm easily found at:
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed