Skipping a mortgage payment is quite serious. However, there are options at your disposal. Here, we will discuss what happens if you miss a mortgage payment.
What Happens When You Miss a Mortgage Payment?
While missing a single payment is not the end of the world, there will be some consequences that you need to be ready for. Your mortgage provider will send you a letter via regular post, or they may give you a call directly.
They may retain your involuntary withdrawal temporarily. You will need to have a candid discussion with your bank to find a mutually beneficial solution. For instance, they may ask that you pay a catch-up charge to move on amicably.
What to Do if You Forgot to Make a Mortgage Payment?
First, contact your lender. They will explain what will happen next. If you anticipate you will not make subsequent payments, let them know. They may be able to negotiate terms beneficial to you.
You also need to discuss forbearance options. Many financial institutions may offer their clients forbearance options if they cannot make a few mortgage payments.
You may also want to look into mortgage relief programs. Local organizations in your area may be able to provide mortgage relief programs if you are unable to pay your mortgage.
Depending on where you live, mortgage refinancing is also something that may be of benefit to you.
By refinancing your loan, you may be able to obtain a different loan type with better terms and conditions, such as an FHA loan. If you are not satisfied with your present lender, then mortgage refinancing may allow you to explore other lenders that may offer better terms and lower rates.
In some cases, a lower interest rate may allow you to afford your monthly mortgage payments. Moreover, you should take control of your debts and additional expenses. Evaluate all of your obligations and other expenditures to identify problem areas.
Make a realistic budget and update it as needed. Look for areas where you can save more. Eliminate non-essentials until you get your finances in order. Speak to your mortgage lender to obtain advice or negotiate better terms that may make your life easier.
How Does a Missed Mortgage Payment Affect Your Credit Score?
Many factors influence your credit score. However, the one factor that is given precedence is your payment record. When you make timely payments, you instill confidence in your lender.
If you have an excellent credit score, it will drop if you fail to make even a single mortgage payment. Failure to pay a bill on time may cause your credit score to drop by as many as 150 points.
Making a single late payment may prevent you from getting better mortgage rates in the future. You may also no longer be privy to prime credit card privileges either.
As can be seen, the consequences for failing to make a payment or even paying your mortgage past the due date can be quite serious.
The best offence is a good defence. Be prepared for the worst. Unforeseen circumstances may present themselves at some point.
For example, someone may become ill, pass away, or become disabled. You may suddenly lose your job due to a recession, or your company may go under. Try to stay connected at all times with the latest financial news, markets, and other relevant industries.
Shop around and compare and contrast rates and terms before settling on a provider. Arrange automatic payments to avoid having to worry about forgetting to make a payment.
Set up reminders and alerts if you are very busy or absentminded. Speak to your provider to try to negotiate better terms and rates. Refinancing your mortgage may allow you to enjoy a lower interest rate, which may help you pay off your mortgage faster.
Saving up a large amount of money to put down your down payment may also allow you to enjoy a lower interest rate and better terms. Create a sound budget and stick to it to prevent insurmountable debt and other financial problems.