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When money is tight -- maybe due to a job loss or an unexpected medical expense -- making your mortgage payment can be hard. But skipping one mortgage payment actually has less immediate consequences than not paying other bills.
Not paying this important bill, however, does have consequences. Here's what happens when you miss a mortgage payment and what to do next.
In general, not paying your mortgage will be reported by your lender to the three major credit bureaus. Then, the credit bureaus will lower your credit score. In addition, a late fee will be added on to the payment you failed to make. Late fees usually are added after an initial grace period -- often 7 to 15 days after the payment due date.
On the positive side, not making one mortgage payment usually doesn't trigger foreclosure. For that to happen, you generally have to fall at least two months behind (and fail to communicate with your lender).
Communicate with your mortgage lender if you need to miss even one payment. In some cases banks are willing to work with consumers. Some lenders are willing to offer informal forgiveness. Others will hold off on late fees or reporting to credit agencies.
"The worst thing consumers can do is disregard the issue entirely and believe they can start making payments on their delinquent account once they start earning a salary," Leslie Tayne, an attorney specializing in debt relief told MainStreet.com.
In some cases, homeowners can qualify for forbearance programs. These are formal programs where people facing financial problems can miss a payment or make a lower payment for a period of time while they sort out financial problems.
Not all banks or lenders will be forgiving, but many will be. If you have a good track record of paying on time, your lender will probably understand your extenuating circumstances. Helping you is in their best interests, too -- it keeps things from escalating to foreclosure (which is a losing situation for the lender and the homeowner).
There are several programs under the Department of Housing and Urban Development that help individuals who are struggling to make mortgage payments. These programs are generally for individuals who expect to miss more than one payment.
"The biggest of these programs, the Home Affordable Modification Program (HAMP), may help you lower your monthly mortgage payments," the Federal Trade Commission (FTC) posted on its website. "Other programs can offer options if home ownership is no longer affordable or desirable for you, you're unemployed, or you owe more on your mortgage than your home is worth."
In some markets, there are local programs that help people with specific financial difficulties make their mortgage payments.
Consumers looking to take advantage of one of those programs can call for free to speak with HUD-approved housing counselors at 888-995-4673.
Regardless of whether you plan to take advantage of a relief program, it's crucial to communicate with your lender. In many cases, talking with your lender can minimize or eliminate any impact. That might involve creating a plan to catch up after you exit your financial crisis, it could mean forbearance, or it might simply be the bank being willing to hold off on reporting you or charging late fees.
Refinancing your mortgage could save you hundreds of dollars for your monthly mortgage payment and secure you tens of thousands of dollars in long-term savings. Our experts have reviewed the most popular mortgage refinance companies to find the best options. Some of our experts have even used these lenders themselves to cut their costs.
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