Late Mortgage Payment: Guide to Getting Approved

By: ROS Team

When you are late on mortgage payments, there could be many reasons. Maybe you’re facing tough finances or forgot. But, missing a payment can hurt your credit and ownership status.

Don’t give up yet, though. If you are in this tough spot, our guide can help. We’ll show you how to get your mortgage payments up-to-date and dodge foreclosure.

Can I Get a Mortgage with Late Payments?

Securing a mortgage with late payments is possible. Yet, it’s a bit harder than having a squeaky-clean history. Lenders consider various factors of your financial health. They check your credit score, earnings, debt-to-income ratio, and seriousness of late payments.

How Late Payments Affect Mortgage Approval?

The severity of the impact of a late payment on your mortgage approval depends on several factors, including:

The Number of Late Payments: A single late payment is typically less damaging than multiple late payments.
The Recency of the Late Payments: Late payments that are more recent are generally considered more negative than late payments that occurred further in the past.
The Severity of the Late Payments: Late payments that were more than 30 days past due are considered more serious than late payments that were only a few days late.
Your Overall Credit History: If you have a strong credit history overall, a single late payment may not have a significant impact on your mortgage approval. However, if you have a history of late payments or other credit problems, a single late payment could make it more difficult to qualify for a mortgage.

Mortgage Declined Due to Late Payment: What Are My Options?

Even if you have a late payment on your record, there are steps you can take to improve your chances of getting approved for a mortgage. These steps include:

Pay your Mortgage on Time: This is the most important thing you can do to improve your credit score and make yourself a more attractive borrower to lenders.

Make a Large Down Payment: A larger down payment will reduce the amount of money you need to borrow, which will make you less risky to lenders.

Get a Cosigner: A cosigner with good credit can help offset your late payment and make you a more attractive borrower to lenders.

Shop Around for a Mortgage: Not all lenders have the same underwriting standards. Some lenders may be more willing to overlook a late payment than others.

Work with a Mortgage Broker: A mortgage broker can help you find a lender willing to work with you, even if you have a late payment on your record.

How Long Does a Late Payment Stay on the Credit Report?

Late payments can stay on your credit report for up to seven years, regardless of whether they are 30-day, 60-day, or 90-day late payments. Charge-offs and collections can also remain on your credit report for up to seven years. However, their impact on your credit score lessens over time.

What Happens if I Miss a Mortgage Payment?

If you miss a mortgage payment, it can result in late fees, damage to your credit score, and potentially lead to foreclosure if you don’t catch up on payments or work out a solution with your lender.

It’s crucial to communicate with your lender as soon as possible to explore options like loan modification, forbearance, or repayment plans to address the missed payment and avoid more severe consequences.

How Do You Explain Late Payments on a Mortgage Application?

When explaining late payments on a mortgage application, it’s essential to be honest and provide a clear and concise explanation. Here’s how you can do it effectively:

Be Transparent: Acknowledge the late payments without making excuses or attempting to blame external factors.

Explain the Circumstances: Provide a brief and factual description of the circumstances that led to the late payments. This could include job loss, medical issues, or unexpected financial challenges.

Highlight Resolution: Emphasize how you’ve taken steps to address the issue and prevent future late payments. Mention any payment plans, loan modifications, or financial improvements you’ve made.

Keep It Concise: Keep your explanation brief, focusing on the essential details. Avoid lengthy narratives or unnecessary information.

Use a Cover Letter: Consider attaching a cover letter to your mortgage application explaining the late payments. This allows you to address the issue directly and demonstrate your commitment to maintaining timely payments moving forward.

Late Mortgage Payment: Final Words

Late mortgage payments can cause stress and pose challenges but don’t lose hope. By communicating effectively with your lender, understanding your options, and exploring government programs, you can improve your chances of receiving assistance.