What happens when you’re one month behind on your mortgage? Do you go to collections? Does your credit take a hit? What can you do?
We’re going to answer all of those questions in today’s post.
First of all, what happens? If you fall behind on your mortgage, there are a few things you need to know.
There’s a grace period. You have 15 days to get a payment in. There’s a standard grace period for your payment to be considered “on-time” and it’s within 15 days of the due date (typically the first of the month.
After the grace period is over and you still haven’t made your payment, then it’s considered late. A penalty will then be assessed to your account, so you’ll have to make the payment plus the late penalty.
We’ve written extensively on this topic, so if you’d like to learn more, click here.
What should you do?
There are several reasons why someone falls behind on their mortgage…especially now with COVID wreaking havoc across the country. You could have lost your job due to cutbacks, or gotten sick, and have been unable to work. You could have lost your spouse/partner due to the virus and thus, have to make payments on your own.
However you got to this point, you need to get on top of the situation.
You need to contact your lender. Fear, anxiety, and judgment influence our behaviors. They might tell you to keep this a secret. You may fear judgment or what they will say, but you need to let them know where you’re at.
Steps you can take
Once you let your lender know about the position you are currently in, it’s time to take action. What can you do?
You can negotiate with the lender:
- Make a plan – If repayment is possible, develop a plan to get there. Review your expenses and income. Can you cut costs somewhere? Can you pick up extra shifts or work overtime? Is there a way to get current on your loan? If not, there are alternative strategies.
- Have them tack the payment onto the end of the loan – You can’t make it up, so you can ask the lender to extend your term and have them place the payment on the end of your loan. A late penalty will still apply, but you forgo having to “get current”.
- Refinance – Work with your lender to “restructure” your loan and make it more favorable.
- Repayment plan – Work with your lender to develop a repayment plan. A repayment plan is a way for you to get current on your loan by making increased mortgage payments over several months.
- Get assistance – If you’re having trouble communicating with your lender, or they’re not receptive to anything you’ve suggested, it’s time to get some help. Contact a HUD-certified counselor. They can guide you through this process, answer your questions, and go to bat for you.
Falling behind on your mortgage is tough, and it usually comes from unfortunate circumstances. And though the stress is real and the consequences are challenging, there’s at the end of the tunnel. Get your bearings, develop a plan, and take action.
**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see website for full disclosures: www.crgfinancialservices.com