Foreclosure is when a lender or loan servicer commences a legal process that allows for property to be sold in order to satisfy a debt after a borrower breaches their mortgage contract, typically by missing several payments. Depending on where you live, the lender may bring the issue before a court to officially foreclose on a property. However, in some states, foreclosure can happen without a judicial process. While foreclosure is a reality many of us try to avoid, there are times when someone may miss a mortgage payment. What happens in that situation, and how many times can you miss a mortgage payment before foreclosure? Let’s take a look.
What happens if you miss a mortgage payment?
Missing a mortgage payment of course isn’t ideal, but it can happen. We’re all human, and it’s always possible to go through some financial growing pains.
Most mortgage contracts include a certain window to make payments before the payment is actually considered “late.” Once you officially miss a mortgage payment, your lender will typically first send a notice that includes a charged late fee. They may then report the missed payment to the three major credit bureaus (Experian™, Equifax® and TransUnion®), which may, in turn, have a negative impact on your credit score. If you’re in danger of missing a mortgage payment, consider contacting your lender — they may be able to help you work out a new payment plan.
How many mortgage payments trigger a foreclosure?
If you’ve already missed a mortgage payment or two and are wondering when you might get a notice of default or a foreclosure warning, it may depend on your lender. In some cases, payments may be rectified by working with your lender before receiving a final notice.
If you’re wondering how many mortgage payments result in foreclosure, then it may be a good time to speak with your lender about your finances. There are several forms of mortgage assistance available to help lighten the burden, depending on the circumstances.
How missing mortgage payments affect credit
Missed payments and foreclosures will most likely affect your credit. As mentioned, there’s typically a 30-day period before a payment is officially considered past due. If the 30 days pass and you remain behind, the payment is late and your lender may be required to notify the credit bureaus, which can have a negative impact on your credit score. If there are multiple missed payments, you’ll likely see a larger drop to your credit score and other consequences could occur. Once your account and payments are back on track, your credit may recover over time.
Sometimes, missing a mortgage payment isn’t completely avoidable. Luckily, there may be opportunities to make up for missed payments. You may be able to communicate with your lender and figure out a game plan.