If you’ve been unable to make your mortgage payment, you are not alone. There is no need to panic if you’ve missed a home loan payment. You have time to get the situation sorted out with your lender and avoid any problems as long as you take action quickly.
Over 5 million homeowners were late with their mortgage payments in March 2009. This number has nearly doubled in the past several months. Many expert projections indicate that this number could rise even higher in the short term. Although the media has been focusing on the subprime mortgage challenges, many prime borrowers are also now having difficulty staying current on their mortgages.
What Does It Mean to Miss a Mortgage Payment?
Each mortgage offers a grace period, normally 10 to 15 days, in which a payment will still be considered to be paid on time. If your payment is not posted within your grace period, you will be charged a late penalty. This is normally a percentage of your mortgage payment, usually between 5 and 10 percent. At this point, you will begin to receive notices from your mortgage servicer reminding you of your payment due. It will include the late charges that also need to be paid. Many servicers will begin reaching out to borrowers who are late in an attempt to see what is going on with the loan. If you have had a history of late payments, you may see the servicer get much more aggressive in its communication with you regarding your late mortgage payment.
Each month your mortgage servicer will supply information to the major credit bureaus regarding your mortgage payment. For each timely payment, you will see the benefit. On the flip side, a late payment is very costly to your credit score. During the first 30 days late, it will show as a late 30 on your credit report and then continue to age into late 60, late 90, etc.
Your Next Step
What you do next depends on your financial situation. What is the reason that you missed your mortgage payment? Was it an unexpected bill that had to be paid or a sudden drop in income? Maybe you just forgot to send in the check. If you feel that you can get back to a current payment status with your mortgage, you should do everything possible to get your full payment plus late charges to the servicer before the beginning of your next payment cycle. Each month that you miss gets more and more costly, both in terms of fees and damage to your credit.
If you have missed your mortgage payment and feel that you are going to face additional challenges with future payments, it is time to take action. The worst thing you can do is ignore the situation. Get proactive and seek help. If your servicer is not aware of your situation, it will assume that you do not want to make your mortgage payments. This is the worst scenario that your servicer can assign to your case, so if this isn’t the situation, you must communicate that to your servicer. Learn about your options by thoroughly reading through the articles and information available to you on our site.
What Are My Choices?
As you investigate your options, you will need to do a real assessment of your plans for your home. Know whether you and your family want to try to remain in your home. If not, there are specific choices that might make sense such as short sales and foreclosures. If you do want to stay in your home, you should call your mortgage servicer as soon as possible. Ask to speak to someone in the loss mitigation department. Explain to the representative that you have missed a mortgage payment and fear that, given your financial situation, you may miss future payments. Communicate your desire to stay in your home. State that you are seeking a way to get back to current payment status and to maintain your mortgage payments.
Many servicers have programs available that can provide temporary payment relief or more permanent modifications to existing home loans. You will need to qualify for these programs based on the specific guidelines offered by the servicer. Unfortunately, many servicers are facing unprecedented high volumes, so wait times can be very lengthy. We have seen wait times exceed two hours for some of the larger servicers. If you do not get through, try calling early in the day or late in the evening, as these may be lower volume periods than midday. You can also ask the receptionist for a fax number and fax in your request to be called. Look for a customer service email shown on your mortgage servicer’s website. No matter what, be persistent and patient. The only way to get help if you want to stay in your home is to work with your servicer, whether directly or through an assistance provider.
What Other Options do I have?
If you are not able to reach your servicer, or if you would like additional help in this process, you can work directly with a reputable organization like ForeclosureIQ.com, which works directly with many servicers to help find solutions for home owners struggling to keep up with their payments. Alternatively, there are many excellent non-profit counseling services that have staff on site to help borrowers. Many of these options can be found on the Internet through a simple web search for non-profit credit or mortgage counseling. Be sure to add your city to to search terms. Most importantly, find someone that can help you understand your options as soon as you possibly can before your situation gets worse and you are left with fewer choices.
There Is a Solution
While it is important to act quickly, try to avoid making rash decisions. Remember, there are numerous alternatives available. Find out what they are, as each may impact your credit rating differently. While falling behind on your mortgage payments can be very scary, you probably have more options available than you think. Always start with the choices that are least damaging to your credit rating. A traditional refinance transaction is always the best option before a loan modification, short-fi, short sale or foreclosure. If you can get a conforming loan, rather than a jumbo loan, you can save on your interest rate as well. Remember, knowledge is the key.
Make sure to get proactive and learn about your options. There is hope.