When Does a Late Mortgage Payment Get Reported?

When does a late mortgage payment get reported to credit bureaus?

When you close on your home, your mortgage lender will inform you of your mortgage payment due date. Most payments are due at the beginning of the month, which makes it easy to remember to make your payment on time. But when is a mortgage payment considered late? And what happens if you make a late payment?

Here’s a quick rundown of important terms:

• Mortgage due date: usually in the first week of the month
• Grace period: typically 10 to 15 days after the due date
• Late fee percentage: typically 4% to 5%

As long as you pay within the grace period, you likely won’t face a late fee or any negative effects on your credit. If you pay after the grace period but within 30 days, your lender might assess a late fee to your account, but it won’t impact your credit. After 30 days, you’ll face both a late fee and a negative mark on your credit report.

If you’re unsure which dates to be aware of, the best place to start is the loan documents you received when you closed on your home. They contain information about your specific grace period and late fee amounts. Remember: a payment is not reported as late to credit bureaus until it is 30 or more days overdue — but internal records and fees can begin much sooner.

Mortgage late payment timelines

As a homeowner with a mortgage loan, it’s your responsibility to make timely payments. If you don’t, late mortgage payments can start accruing penalties and impact your credit. Here’s the timeline you should understand to avoid worsening consequences.

Grace period: 15 days

A grace period is the amount of time between your mortgage due date and the date on which your lender assesses a late fee to your account. Most lenders’ grace periods are 15 days to account for situations like postal delays and variable paydays. While paying on the due date is ideal, it’s fine to submit your mortgage payment during the grace period, and there won’t be any negative effects for doing so.

However, once your payment extends to 30 days late or more, you run the risk of damaging your credit, which can make it more difficult to secure loan financing in the future. After 30 days, your lender will report the delinquency to the credit bureaus.

Late fee: 16 to 29 days

It’s important to understand the distinction between a late fee and a 30-day delinquency. A late fee is assessed by your mortgage lender and has no effect on your credit report or your credit score. Even if you are charged a late fee, paying your mortgage by that 30-day mark will help you avoid the 30 days past due mark that triggers reporting.

Late fee amounts can vary from lender to lender, but most hover between 4% and 5% of the payment amount. Your loan documents should clearly state what sort of late fee you might face if you don’t pay your mortgage on time.

Credit impact: 30 days

The exact date when a late payment shows up on your credit report can lag a bit, because the three credit bureaus only report monthly. That means a 30-day-late payment might pop up on your credit report a month later than when it happens. The table below provides a summary timeline for your mortgage payment.

Consequences of a late mortgage payment: fees, credit damage and foreclosure

Even a single 30-day late payment can drop your credit score by 50 to 100 points. Late payment marks stay on your credit report for up to seven years. If you don’t get caught up on mortgage payments, you could face delinquency and foreclosure. Here’s what that looks like:

30 days late

At the 30-day mark, your lender will likely report the delinquency to the three major credit bureaus: Experian, Equifax and TransUnion. At this point, you’ll face both a late fee and a ding on your credit, which could last for several years, making it more difficult to borrow money at favorable terms.

60, 90, 120 days late

If you miss two or more mortgage payments, the damage to your credit score multiplies, lowering your score more and more over time. This will make it much more difficult to secure financing for any loans in the future. At this point, your lender might initiate collections activity.

When you get this far behind, you might fall victim to rolling lates: When you miss a payment, but pay it the next month and never pay the current month’s payment, thus staying one month behind on payments. Even though you’re technically making payments, your credit report still reflects a late payment month after month, which can damage your credit further.

Foreclosure

Each lender may have a different point of default, which is the point at which your loan is late enough to be considered in default. When yours reaches this point, your lender can begin the process of foreclosure, which means they can use your home as collateral for your unpaid loan.

The consequences of foreclosure can include loss of your home, but also significant damage to your credit and difficulty purchasing or even renting a home in the future.

If there’s good news, it’s that your lender wants to do everything possible to prevent foreclosure. Banks will often work with you to come up with a suitable solution for helping you resolve your past-due debt and get back up to speed with your mortgage payments before moving to foreclosure.

What to do if your mortgage payment will be late

As soon as you know you won’t be able to pay your mortgage on time, the first step is to contact your lender. In most cases, it can work with you to help you get back on track. After all, foreclosure isn’t beneficial for lenders any more than it is for you.

A statement of hardship can be a helpful tool for proving your financial situation to your lender, making it more likely to get the help and support you need. This brief summary should include clear next steps and a timeline to get back on track, along with the following:

• Cause of hardship (job loss, medical, temporary)
• Relevant dates of emergencies or events that led to the hardship
• How long you expect to experience hardship
• Pay stubs and/or bank statements

Keeping good records and having the following items at hand will make things dramatically easier for you to keep track of your mortgage as you pay it each month, and will come in handy if you find yourself getting off track. We recommend keeping both digital and paper copies of the following, if possible:

• Most recent mortgage statement (account number, balance, due date)
• Recent pay stubs or proof of income (past two to three months)
• Bank statements for the past two to three months
• Any unexpected expense documentation (medical bills, layoff notice, contractor invoices)
• Contact info for your mortgage servicer (phone, email, website, loss-mitigation department)
• Your copy of the mortgage note / closing disclosure (if available)

Hardship options

If you’re falling behind on your mortgage payments, the best course of action for you depends on your situation and how far you’re behind. Below, we’ve listed a few options you could consider.

• Forbearance: Immediate relief. You’ll be allowed to miss an agreed-upon number of mortgage payments entirely. At the end of the forbearance period, you’ll have to pay back the missed amount in a variety of ways.
• Loan modification: Partial relief. Your lender might allow you to stretch out the loan term or reduce the interest rate, with the end goal of making each monthly payment smaller.
• Repayment plan: Immediate relief. You can stop making mortgage payments for a certain period of time, but your lender will spread the missed payments over the remainder of your loan payments.
• Payment deferral: Immediate relief. You’ll be able to stop making payments for a certain period of time, but those payments will be tacked on to the end of your mortgage.