HOW and HOW MUCH Late Mortgage Payments Can Hurt You

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
http://activerain.com/droplet/59Ww
 
 
HOW and HOW MUCH
Late Mortgage Payments Can Hurt You
 
 
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:
 
Gene Mundt
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed
 
American Portfolio Mortgage Corp.
NMLS #175656
 
 
Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
 

 

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 04/19/2018 01:00 AM
  2. Jeff Dowler, CRS 02/22/2018 02:13 PM
  3. Gabe Sanders 03/03/2018 11:40 PM
Topic:
Lending / Financial
Location:
Illinois Will County New Lenox
Groups:
Mortgages
Home & Credit Savvy
Chicago Area Real Estate BUZZ!
Consumer Mortgage Tips
Bananatude
Tags:
mortgage payments
underwriting guidelines
credit advice
late mortgage payments
overdue payments
mortgage approvals

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Rainer
420,941
Sham Reddy
H E R Realty, Dayton, OH - Dayton, OH
CRS

Great insight into late mortgage payments and consequences!!!

Depending on the consumer, the consequences felt from a late payment could range from mildly damaging to severe. 

Feb 21, 2018 04:17 AM #10
Rainmaker
4,258,877
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for the information, Gene.  This is a situation that can get from bad to terrible very quickly if the payer does nothing to fix it.

Feb 21, 2018 05:17 AM #11
Rainmaker
347,192
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

It is very frustrating for those of us who have more of an awareness of what is factual or not. But for the consumer, information that is not accurate could be costly.

Thanks for sharing a great post.

Feb 21, 2018 05:28 AM #12
Rainer
249,178
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

We know that any credit blemish can hurt your scores. I ask the question, why is this person having financial troubles? When this person has a Mortgage including other types of debt they are forced to shuffle their money around. The obvious signs of delinquency can be found in the timeliness of their previous Mortgage payments. If they go from making the payment of the 1st of each month to around the 15th, you now have a trigger point to explore with them.

Feb 21, 2018 09:27 AM #13
Rainmaker
2,269,891
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The horses mouth has spoken....

Feb 21, 2018 11:38 AM #14
Rainer
173,737
Deepak Chauhan MCNE®
Versailles Property - Irvine, CA
Yes, I will sweeten the deal

 ... type of mortgage you apply for dictates how Mortgage Underwriters will view late payments? 

Good post!

Feb 21, 2018 04:05 PM #15
Rainmaker
420,269
Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTOR®, Brick & Howell NJ Homes for Sale

Hi Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi.  I was shocked to learn that social media things could be "unreliable and erroneous".

Seriously - you've written about this well. it's amazing to me how many people just "don't get it" and continually cause themselves problems. Consulting a professional as yourself is an obvious advantage for them.

Thanks for sharing!
Bruce

 

Feb 21, 2018 04:38 PM #16
Rainer
405,089
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Gene,

With online bill pay, it should be easy not to miss any payments. However, you still need to look on a regular basis to make sure nothing weird is happening with the setup.

Feb 21, 2018 08:21 PM #17
Rainer
420,941
Sham Reddy
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing!!!

Consumers need to know that ... depending on the consumer, 

the consequences felt from a late payment could range from mildly damaging to severe. 

Feb 22, 2018 04:01 AM #18
Rainmaker
4,610,220
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Congratulations on your feature recognition. This is important information to share with mortgage borrowers.

Feb 22, 2018 04:05 AM #19
Rainmaker
1,455,050
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

Last year a local financial institution incorrectly reported a late payment.  It took multiple phone calls and visits to their office to have it removed, corrected and my score back where it was before the error.  At fault or not, it could have hurt.  Lesson learned - monitor credit!

Feb 22, 2018 09:04 AM #20
Rainmaker
1,999,021
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hi Gene: I get this question a lot from sellers who are in escrow and don't want to make their next mortgage payment. Too much liability for escrow to tell them what to do, so escrow just says make your payment.

I lay it out for them, what likely constitutes a late payment vs a late penalty and explain under no circumstances do they want to go past the 30-day mark. Not only that, but some lenders charge extra interest to the date the payoff reaches the bank, which could be way past the 30-day mark.

Feb 22, 2018 12:00 PM #21
Ambassador
3,587,836
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Hi Gene

Great education here for homeowners on an important topic. As Elizabeth points out the question of making a layment often comes up as we get close to closing, and sellers need to understand they cannot muck around with dates and payments. I suspect some homeowners are not aware of the consequences of just one late payment.

Jeff

Feb 22, 2018 01:48 PM #22
Rainmaker
2,463,350
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Another great post Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi invaluable information for everyone.  Congratulations on the well deserved Feature!

Feb 22, 2018 07:02 PM #23
Rainmaker
2,764,534
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Working with a Newbie loan "officer" as a "favor" is the worst favor you can do for a client !

Feb 26, 2018 08:49 AM #24
Ambassador
2,535,878
Debe Maxwell, CRS
www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Well, you really knocked this one out of the ballpark, Gene!

You know, on the topic of paying your final payment while in Escrow - I always tell them to make it BUT, to confirm with the lender. Otherwise, don't listen to ANYONE who tells you it's not necessary - it can have a catastrophic impact at the very end of a transaction if they are tight on their DTIRs, for sure.

Congrats on the feature, Bro Gene! 

Feb 26, 2018 07:29 PM #25
Rainmaker
1,479,993
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

the idea of late payments gives me a stomach ache just thinking of the impact on someone's credit

Mar 04, 2018 05:55 AM #26
Rainmaker
657,588
Nick & Trudy Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

Great post with excellent information everyone should read. Always love at settlement when lenders tell borrowers they have 15 days to make payment. I always advise clients not to take advantage of that having seen it damage my credit in the past when I first moved here from the UK. Always better to pay on time.

Mar 04, 2018 07:49 AM #27
Rainmaker
4,270,250
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Good morning, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi it's important for homeowners to not use that grace period unless it's absolutely essential....the payment can be made online and on the 1st of the month.... that's the goal.

Apr 19, 2018 06:50 AM #28
Rainmaker
1,479,993
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

This is really important information to share with consumers - I recently refinanced and had to resubmit my information for auto drafts - I reversed two numbers in my bank routing number - made me late - I was on the phone the next day getting the bank to "forgive" me so it didn't show up as a late payment 

Apr 23, 2018 04:46 AM #29
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

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