Why You Should Not Miss Your Mortgage Payments
Effects of missed mortgage payments
You should try as much as possible never to miss your mortgage payments. The reasons you should not miss your mortgage payments are obvious. But for the first homeowners, they may not actually know the impacts such may have on their personal finance. Without missing words, below are what can happen if you miss your mortgage payments.
Foreclosure: I don’t think that there is anyone that owes mortgage loans that is not aware of this. If you have mortgage loan, you have the responsibility to pay back the loan. But there is one thing that may not be clear to many. There are lenders that are waiting for you to miss your mortgage payment just once so that they can start the foreclosure process. Those ones that are lenient can wait for ninety days. Do you know what that means? It means that you stand the risk of losing your home. The lender has the right to sell your home in order to recover his money. If the proceeds from the sales of the house is more than your outstanding mortgage amount, the excess will be paid back to you.
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Double Payments: If you miss your mortgage payment once, you will need to pay double amount in the following month. You may think that that is easy to do but the truth is that it can actually be a difficult thing to do. If you find it difficult to pay for one month, paying for two months at once may not be that easy.
Late fee: If you miss your mortgage payment, it is true that you can clear the missed payment in the following month. But that is not the whole story. You will also need to pay late payment fee. This is additional expense that is totally avoidable. Late payment fee is a form of penalty that your lender imposes on you any time you miss your payment. It serves two purposes. First, it serves as a deterrent to borrowers from making late payments. Second, it reimburses lenders for the possible income that they might have lost by the reason of not paying the expected payments at the due date. Late payments actually affect the cash flow of the lender. If the money doesn’t come when expected, it disrupts the activities of the lender. That is why lenders usually surcharge borrowers.
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Impact on Credit: Any time you miss your mortgage payment, your lender will report to the credit bureaus. Late payment will stay in your credit report for up to six years. This can hurt your credit score. Any time lenders put inquiries on your credit file, they will always see this. This does not help your creditworthiness. Although the effect will start diminishing if you start and continue to make your payments promptly. Paying up your missed mortgage payment does not mean that it will be removed from your credit report.
In conclusion, it is very important that you make your mortgage payments as at when due. If you know that a certain amount of mortgage loan will be too much for you, it is better you go for the amount that you can pay conveniently without jeopardising your personal finance.