What Happens When a Mortgage Payment is Missed?

When a mortgage payment is missed, several things can happen:

1. Late Fees: Most mortgage lenders have a grace period of 15 days for the payment to be received. If the payment is not received by the end of the grace period, a late fee is usually assessed.

2. Negative Impact on Credit Score: Late mortgage payments can have a significant negative impact on credit scores. A single missed payment can drop a credit score by 100 points or more, depending on the credit history.

3. Notification from Lender: The lender will contact the borrower to remind them of the missed payment and request payment.

4. Foreclosure: If the borrower misses multiple payments and does not communicate with the lender to work out a solution, the lender may initiate foreclosure proceedings. Foreclosure is the legal process by which a lender takes possession of a property because the borrower has defaulted on the loan.

5. Loss of Home: If foreclosure proceedings are successful, the borrower loses their home and the lender takes possession of the property. The borrower is also responsible for any remaining balance on the mortgage after the property is sold.

It's important to contact your lender as soon as possible if you are unable to make your mortgage payment. Most lenders are willing to work with borrowers to find a solution, such as a payment plan or loan modification, to help them avoid foreclosure.