The best time to begin planning a solution to foreclosure is when the homeowners become aware that they will be unable to make the monthly payment, but have not yet missed the due date. Once they have fallen behind by even a few weeks, negative consequences will begin to emerge, many of which will build one upon the other to eliminate any chance of saving the home the longer the owners wait.
Being late by just a few weeks, however, is not long enough for the bank to begin reporting borrowers to the credit reporting agencies as late on the mortgage payment. It is typically once the homeowners are 30 days late that the bank will begin to report the missed payments, which will immediately begin to drag down the credit scores of the homeowners if they are unable to get back on track very quickly.
This 30-day period is the same length of time that most other types of creditors will use to begin reporting debtors as late on a monthly installment payment. For example, credit cards, car loans, personal loans, and mortgages all usually do not report the account as late until it is past 30 days. Although this grace period may be helpful for the credit scores of borrowers, missing any payment due date will have negative effects even if the account is paid to current within a month or two of falling behind.
These negative consequences are a result of the fact that almost every creditor will begin adding interest on to the missed payment as soon as it is missed, and late payment fees will also be added. If the extra fees and interest trigger other fees (over the limit and so on), it may cost even more for the homeowners to correct the situation. So it may cost the borrowers more money than just the regular payment to make sure their account is current after falling behind for even just a few weeks.
Typically, there is very little to worry about if the mortgage is only behind by less than a month, besides the interest and late fee charges. The extra interest, though, will usually amount to very little if the account is brought back to a current status the next month, and the late charge may not be added until after the a specified grace period has expired. But even then, it may be very simple for homeowners to get back in good standing this early.
Homeowners should always find out how much it will cost them to reinstate the mortgage payments once they have fallen behind a month. If they make the regular monthly payment, the bank may accept this, but will continue adding interest on the interest that was not paid on time, as well as interest on any late charges. Thus, borrowers may find out even later that, while they technically made all of the agreed payments, they are falling further and further behind per month. It is far wiser to make absolutely sure of any extra fees to be paid off before assuming that the mortgage loan is completely on time once again.
Nick writes for the ForeclosureFish website and blog, which aim to educate homeowners on how they can avoid foreclosure on their homes before it is too late. The site considers numerous aspects of how foreclosure works and how the process can be stopped, as well as how homeowners can preserve their credit for as long as possible during foreclosure. Visit the site to read more about methods to stop foreclosure, such as mortgage modification , foreclosure refinancing, and more: http://www.foreclosurefish.net/