3 Consequences of Mortgage Delinquency

If you repeatedly pay your mortgage late or if you miss payments, your status with your lender is one of mortgage delinquency. Here are a few of the negative consequences of mortgage delinquency. 

1. Late Fees

The first thing that you will have to deal with when your mortgage is delinquent is a late fee. At first, the late fee might not seem like much. However, if you do this frequently, the fees could add up to a substantial amount of money. The fees will keep getting bigger the longer you do not pay the mortgage. 

2. Credit Damage

When you fail to pay the mortgage, besides the late fees, you will also have to deal with damage to your credit history. Every time you make a late payment, your lender is likely to report you to the credit bureaus. There is a grace period that you have to work with in most cases. However, if you are truly late, they will end up reporting it. 

Credit damage from late payments could be devastating to your future financial prospects. The biggest criterion in determining a credit score is your payment history. As much as 35% of your score is determined by this single factor. Therefore, when you go to buy another house or a car or anything else on credit, you may have trouble getting approved or may find it impossible.

3. Foreclosure

The biggest problem that you will have to deal with when your mortgage is delinquent is foreclosure. This is the last step in the process, and it can be devastating when it happens to you. When you do not pay your mortgage, the lender is going to send you a notice of default. Once they notify you that the loan is in default, you have a certain period of time to remedy the problem. If you do not work with them to fix the problem, they will eventually foreclose on your house. 

You will lose your place of residence and be forced to find a new place to live. You will not be able to buy another house immediately, and you may have to rent. When you go to rent, you will most likely have to pay a higher deposit because of your bad credit file. 

The foreclosure will stay on your record for seven years. This means that for the next seven years, you will have to do everything on a cash basis or work in the subprime lending market. Much of what you try to do financially in the future could be negatively affected by the foreclosure that you went through. 

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