There are many reasons a homeowner might make a late mortgage payment. Life can be unpredictable. Bank holidays, financial hardships or medical emergencies can all create a delay. Thankfully, mortgage lenders typically offer their borrowers a grace period. But how long does it last?
Let’s take a deeper dive into what a mortgage grace period is, how it works and some commonly asked questions.
What Is A Mortgage Grace Period?
A mortgage grace period is a set amount of time following the due date of a mortgage payment when any penalties are waived. If the full payment is not made during the mortgage payment grace period, a late fee will be charged and the missed mortgage payment will be reported to the credit bureaus.
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How Long Is A Grace Period For A Mortgage Payment?
The amount of time in the mortgage payment grace period varies by lender, but it’s usually 15 days or 2 weeks. If you don’t make your payment within this timeframe, you could be charged a late payment fee (which can be a set amount or based on your principal and interest). For example, if you have a monthly mortgage payment of $1,200 and get a 3% late fee, you’ll need to pay an extra $36.
To be clear, you should always pay your mortgage on time if you’re able to, and a grace period doesn’t absolve you from having to make the payment. It merely gives you a little more time to pay it before late fees and other negative consequences set in. It’s also a great feature to have if you accidentally forget to make a payment but catch the mistake before the grace period has expired.
When Is A Mortgage Payment Considered Late?
Let’s consider the standard mortgage grace period. If your mortgage payment is due on the first of the month and your grace period is 15 days, your payment would be considered late on the 16th.
If that falls on a weekend, you may have until the following business day to make the payment, but you should check with your lender to verify these terms. On the 16th (or following business day), you will be subject to the relevant penalties.
Is It OK To Pay Within The Mortgage Grace Period?
Yes, however, you should always strive to make your mortgage payment on or before its due date. The idea of a grace period is to allow late payments without consequences, but that doesn’t mean you should rely on it.
Grace periods are no doubt wonderful to have. They save forgetful homeowners lots of money each year, especially if their late penalty is calculated as a percentage of their monthly payment. That said, best practices from a credit score perspective encourage us to make our payments on or before the due date, so always go that route if you can.
One way to ensure this is to make payments online to avoid mail and bank processing delays. An even better solution is to enroll in automatic payments so your payments go through every month on time.
What If You Can’t Pay Within The Mortgage Grace Period?
If you’re unable to make your payment when it’s due or even within the mortgage grace period after it’s due, your payment will be considered late and there are a few consequences you can expect.
Added Late Fees
First off, late fees will be imposed in the form of a flat fee or a percentage of your monthly payment amount. This policydepends on your lender, so some borrowers may get hit harder than others, but we all prefer to avoid servicing fees and penalties when we can.
Obviously, late fees can really add up and put a growing financial burden on you. If you can, try to make your payment as soon as possible and pay on time next month to avoid additional fees in the future.
Lower Credit Score
Beyond fees, late mortgage payments are a big no-no when it comes to your credit score. After 30 days, your lender will report the late mortgage payment to the credit bureaus.
Failure to make a timely mortgage payment will land on your credit report and cause your credit score to drop significantly. This will make borrowing in the future more expensive and difficult as you work to repair your credit
FAQ
Let’s look at the answers to some frequently asked questions about mortgage grace periods.
The Bottom Line: Mortgage Grace Periods Offer Flexibility
Grace periods are a great way to gain a little wiggle room when it comes to paying your mortgage. First, though, you should check your mortgage note to make sure you’re crystal clear on the terms of your loan.
Do the best you can to make your mortgage payment on or before the due date. If you can’t, avoid late fees and credit hits by paying before the grace period ends. If you’re struggling to make consistent payments, learn how to avoid foreclosure and tips for getting back on your feet.
Miranda Crace
Miranda Crace is a Staff Writer for Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate and personal loans for over 10 years. Miranda is dedicated to advancing financial literacy and empowering individuals to achieve their financial and homeownership goals. She graduated from Wayne State University, where she studied PR writing, film production and film editing. In her spare time, Miranda enjoys traveling, actively engages in the entrepreneurial community, and savors a perfectly brewed cup of coffee.
