If you're a homeowner, you already know that missing your mortgage payment is a big deal. Not only are late or non-payments likely to result in ongoing calls from your lender, but a late payment could also affect your credit score. The emotional and psychological toll of late payments can make dealing with the last year's stress even more difficult.
Avoiding missed payments with an alternative option like forbearance or a refinance could be better than skipping your monthly payment entirely.
If you're concerned about missing a payment and want to consider a refinance, you can explore your mortgage refinance options by visiting Credible to compare rates and lenders.
What you should know about missing a mortgage payment
What happens if I miss a mortgage payment?
It depends. If your payment is just late, it may not affect your credit score at all. Some lenders wait at least 30 days before submitting late payment information to credit reporting agencies. If you can make up your missed mortgage payment quickly, you should be fine. However, if your payment is more than 30 to 60 days late, it will likely appear on your credit report. If your payment is more than 90 days late, your lender could pursue foreclosure.
Your lender will likely also charge you a late fee in addition to your missed mortgage payment.
Does missing mortgage payments affect my credit?
Missing mortgage payments can affect your credit. On-time payments make up about 35% of your total credit score. If you have a history of late payments, this can lower your credit score. Lower credit scores make it difficult to qualify for additional loans.
How will missing one mortgage payment impact my credit?
According to FICO, a single missed payment could drop your credit score by 50 points or more at the 30-day mark. If the late payment reaches 90 days, the score could drop by nearly 200 points. The type of credit, debt-to-income ratio and credit age can affect how much damage a single missed payment will have on your score as well.
What are my options if I can't pay my mortgage?
If you know you won't make your mortgage payment, call your lender as soon as possible. If you have any mortgage loan that's backed by Fannie Mae and Freddie Mac (FHA, HUD, VA, USDA, etc.), you're legally entitled to protection through the CARES Act. Your lender can help you apply for forbearance and/or pause foreclosure proceedings.
Alternatively, you could contact your lender before a late payment and ask them for a deferment. A postponement would allow you to skip a payment and add it to the end of your loan without affecting your credit score.
If you want to lower your monthly payments for the long term, consider refinancing your mortgage loan. With interest rates still significantly lower than usual, refinancing your home loan could save you a lot of money.
If your loan is currently in forbearance, you may qualify for a refinance if you make on-time payments for at least three months following the end of your forbearance.
Since missed payments affect your credit score, you should apply for a refinance soon if you anticipate that you won't be able to continue making your current payments.
You can use Credible's free online tool to research different mortgage refinance lenders and see what your loan options are, all without impacting your credit score.
What are today's mortgage rates?
The average 30-year fixed-rate mortgage is 3.17%, an increase of .08% from last week and a .33% decrease from this same time last year. The average 15-year fixed-rate mortgage is 2.45%, an increase of .05% from last week and a reduction of .47% from the previous year.
If you're planning to apply for a refinance, make sure to use an online mortgage calculator to determine your new monthly costs with a refinance.
On-time payments matter
Many Americans are feeling a financial pinch this year. Millions have already taken advantage of loan forbearance or opted to refinance their loans to a lower rate. If you're struggling to make your payment, you have options. Call your lender to discuss forbearance or visit Credible to get in touch with experienced loan officers and get your mortgage questions answered.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at firstname.lastname@example.org and your question might be answered by Credible in our Money Expert column.