If you’re struggling to pay off your mortgage and you do the things needed to get it, it can be tempting to think that you can get away with not paying some of your loan. If this happens, it could cause you to lose your house. This post will tell you what happens if you default on a mortgage loan.
What Happens If You Pay Your Mortgage Late?
After 15 days have gone and you have not made your payment, you will be assessed a late fee. If you are still unable to make your payment after 30 days, your loan will be considered defaulted.
Important: Monthly payments are frequently given a grace period by mortgage lenders. Without incurring late fees or penalties, you usually have until the 15th of the month to make your payment.
Your lender will then record your late payment to credit bureaus, which will have an impact on your credit score.
If You Don’t Make A Payment For More Than 120 Days, You’ll Be Left Behind.
When you’re 120 days or more behind on your payments, the foreclosure procedure will begin.
This is when the lender takes possession of the property and kicks you out. The legal method for this varies from state to state. The lender’s goal is to sell the property and use the revenues to pay off your remaining debt.
This may appear to be a good solution because you’re no longer responsible for the remaining loan sum, but you may be obliged to pay the difference if the revenues from the sale don’t cover the entire loan balance. This is known as a “deficiency judgment,” and it forces your lender to take additional legal action.
Some Options If You Are Unable to Make A Payment.
An adjustment to a loan: Your lender may be willing to change your loan terms to make your payments more manageable.
An alternative deed to foreclosure: In exchange for total or partial debt forgiveness, you can voluntarily relinquish ownership of your home to the lender. This is usually only an option if the house is about to be foreclosed upon.
A repayment schedule: These plans are for borrowers who have fallen behind on their payments by a few payments. They let you pay a higher monthly payment until your past-due balance is paid off.