Late Mortgage Payments Affect on Credit

If my mortgage is due on the 1st of the month and the past due amount is due after the 15th, what happens to my credit or loan if I make my payment 2 or 3 days after the 1st?

3 Answers

The penalty for a (slightly) late mortgage payment: Quick answer. Nada.

Your credit will not be impacted in most cases until you have been delinquent on a payment for a period of 1 month (30 days, in some instances). The lender will normally impose a late fee of up to @ 5% of the loan payment if you pay after a 15 day "grace period" and similar arrangements or penalties exist on credit cards, and other installment loans, like a car loan.

Lenders will keep track of the dates they recieve and post your payment to your account, but will not report anything derogatory to the 3 major credit repositories until you have become past due by a month or more.

Most mortgage payments are due on the first of the month, as a general rule. All mortgage payments are paid in arrears. This means that any mortgage payment covers the interest owed for the preceding month. It's the opposite of rent payments, which are due in advance.

Since mortgage payments are paid in arrears, your first mortgage payment will always be due at the end of the first full month you took out the loan. So if you settle in early December, your first full month will be January and your first mortgage payment will be due February 1st -- almost two months after settlement.

If you settle at the end of November, your first full month will be December and your first payment will be due January 1st -- about one month after settlement.

Nothing happens to your credit until you are over 30 days late on the mortgage. After the 15th day the bank considers you late on the mortgage and will charge you a late fee. Once the mortgage is 30 days late it gets reported to the credit bureau's and they mark that on your credit report thus hurting your credit. As long as you pay your mortgage within the month that it is due you will be fine as long as you don't pay it after that.

As long as you make your mortgage payment prior to the 15th of the month you will have no "late fee" After the 15th of the month but prior to the first of the following month you must pay the full payment and late fees as shown on your monthly payment to avoid a 30 day late on your credit.

So only if you go 30 days late will this affect your credit, but you must be careful that you include any late fees due if you are paying after the 15th of the month.

Also worth noting, if you miss a payment one month and then make your next payment on time, it will actually count for the missed month. So you will be 30 days late again. This will continue until you can make a double payment.