What Happens if I Skip a Mortgage Payment?

Real Estate Agent with REMAX Advance Realty II 3233262
When finances get tight, it might be hard to pay all your bills. You might be in an uncomfortable position of needing to select which bills to prioritize. What happens if you skip your mortgage payment for just one month?
What if I’m just a little late? 
Your credit will not be affected if you are simply late with your payment, as long as your lender gets it before the 30-day mark. If your payment is due on the 1st and you pay it after the 15th, you will need to pay a penalty, but the credit bureaus will not be informed.
What happens if I’m more than 30 days late? 
Once you are more than 30 days late, your credit will take a nose dive. If you’re late with any credit card, it will affect your credit, but since your mortgage is such a huge loan, being late is disastrous for your score.
If you made the payment and have proof that you got it in before the 30-day mark, but your report shows that you were late, you can write to all the credit bureaus and contest it. The bureaus must investigate and if you supply the proof, it should be handled quickly.
How does a 30-day mortgage late affect my other credit lines? 
After your lender reports your 30-day late to the three credit bureaus, your credit score will drop. Usually lenders report delinquencies once a month and then the credit bureaus adjust these scores immediately (it’s their job so they are fast).
Your other creditors will periodically check your credit, making sure you’re still a good credit risk. How often they perform this check depends on the lending institution. You’ll probably start seeing the effect of your mortgage late within a couple of months.
When a creditor discovers that you’ve missed a payment, they will get very nervous. There could be a ripple effect where every lender suddenly enacts clauses buried in your contract, which allows them to increase your interest rate and decrease your credit line.
It might not seem fair. After all the reason you couldn’t make your mortgage payment on time is that you’re having financial difficulties and this just adds to the problem.
If you look at it from the creditor’s viewpoint, they are concerned that you might start skipping payments with them as well. If you do it with one lender, you could very well do it with another. They are looking at past trends with other borrowers.
You can sometimes call the creditor and work out a deal. Sometimes if you’re willing to close out the account, they will allow you to make your payments per the old agreement until the balance is paid off.
Will the lender start foreclosure proceedings if I only miss one payment? 
Probably not. They usually wait until you’ve missed three payments before starting the foreclosure procedure. It’s a long and costly process for them, so they typically don’t jump to go down that path. Plus they are currently inundated with people in foreclosure, so they usually wait a while.
I know that I can’t make next month’s payment. What are my options? 
If you know that you will be late with your mortgage payment, call your lender. You might qualify for a special forbearance (temporary relief granted by the lender). They might allow you to skip a payment or two, but they will add the missed payments to the loan amount, so you’ll end up paying them at the end of the term.
If you cannot afford to pay all your bills in one month and your lender will not work out a deal with you, it is better to be late with another bill, if possible. It will still hurt your credit, but not as drastically as a missed mortgage payment.
If you have substantial equity and excellent credit, you can opt to take out a HELOC. This would be your best option as these loans can close quickly. Don’t wait until you have missed a payment, as you won’t qualify for the loan.

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Jose Francisco Sanchez

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