Here’s what New Orleans homeowners need to know about due dates, grace periods, and late fees, as well as how missing payments might affect credit.
As a New Orleans homeowner, do you know when your mortgage payment is really considered late? How late does a mortgage payment have to be before it’s reported to credit bureaus? How exactly does this delinquency affect your credit?
If making mortgage payments on time is an issue, you should know when and where to seek help to bring your payments up to date, and what other possible mortgage payment solutions are available to you. Here’s a quick look at industry terms and typical timelines.
Due Dates and Grace Periods
Just like most loans and lines of credit, mortgages have fixed payments due monthly. Typically the due date for mortgage payments is the first day of each month, and when this is the case, a late fee is usually assessed after the 15th.
This time period between the due date and before a late fee is assessed is called a grace period. Most mortgage companies won’t start collecting until after the grace period. Some might send a reminder from a week to 10 days after the due date that your payment is expected.
Mortgage solutions experts do warn homeowners not to assume these dates hold true for their mortgages, and advise them to contact their mortgage company or double-check their deed of trust. That document will also tell you the terms of your mortgage, loan amount, interest rate, payment amount, and late fee amount (usually a percentage of your mortgage payment).
When Do Lenders Report Late Payments?
Most mortgage lenders don’t accept partial payments. They typically report a late payment to credit bureaus when a payment is 30 days past due. Mortgage pros recommend taking this very seriously, and using the grace period only when absolutely necessary. Homeowners should make their payments before the due date or as close to it as possible.
Late payments of any kind can damage your credit, and just one late mortgage payment reported to the credit bureaus can affect your credit score. A damaged credit score can disqualify you from a new home loan or refinancing.
How Is Your Credit Score Affected?
A late mortgage payment can affect your credit score in different ways, depending on several factors. These include:
- Length of delinquency. For example, a 60-day delinquency will have a more serious impact than a 30-day one. After 120 days — and with foreclosure proceedings typically started — a credit score could plunge 200 points or more. If you file for bankruptcy it could take up to 10 years for your credit to recover.
- Pre-delinquency credit history. Depending on how good your credit score was before, one missed payment could reduce your score anywhere from 70 to 130 points, with the higher penalty affecting homeowners with better credit. This is due to the so-called “perceived risk” — when lenders less expect borrowers with better credit to default on their loans and therefore penalize them more severely.
When Does Foreclosure Start?
Typically foreclosure proceedings start 120 days past your due date. You’ll get a so-called breach letter from your lender informing you of the impending foreclosure. Applying for loss mitigation immediately to avoid foreclosure in New Orleans could delay the process, giving the homeowner a chance to catch up on payments and look into foreclosure avoidance solutions.
Foreclosure begins if the loan is not brought to current status and no alternative to foreclosure is worked out (or at least applied for). Under federal law, you can still apply for loss mitigation after the foreclosure begins — you just need to submit your completed application no later than 37 days after foreclosure begins.
Your Options If You Can’t Make Your NOLA Mortgage Payment
Don’t despair if you can’t make a payment on time — there are options available from mortgage-loan servicing companies and companies like Big Easy Buyers. Mortgage solutions experts recommend applying for at least one option — even if you don’t think you’ll qualify — just to buy yourself some time.
Provided you act quickly, possible foreclosure avoidance solutions include:
- Refinancing under the government’s Home Affordable Refinance Program (HARP)
- Mortgage modification
- Loan repayment
- Late-fee deferral
- Capitalization of past-due interest (adding the interest portion of past due payments to your mortgage balance and readjusting the payment due date)
- Assistance programs offered by your mortgage servicing company, depending on your eligibility
If You Are Still Struggling to Pay Your Mortgage
Whatever the reason, if you can’t make your mortgage payments anymore — and haven’t been able to negotiate a repayment plan or loan modification with your lender — you might be wondering if you’re out of options. You are not.
In some cases, your best option may be to sell your New Orleans house for cash, use the money to pay off your lender, keep what’s left over, and move on with your life. By selling your house immediately, you can avoid damage to your credit and further loss of equity in your home, as well as foreclosure. If you need more information about your options to avoid foreclosure or need to sell your house for cash as is, contact us via phone or by filling out a quick form to learn about our simple 4-step process.