Sometimes life gets chaotic, and you’re worried you might miss a mortgage payment. It can happen to anyone, whether because of strained financials or simply forgetting to take care of it on time. But missing a mortgage payment has steep consequences – not only might you get hit with a late fee, but your credit score could take a negative hit.
Did you know:
- Even one late mortgage payment can impact your credit score
- Your payment history is the #1 factor credit bureaus weigh in calculating your credit score
- Mortgage payment late fees may be steeper than credit card late fees
Here at Newrez, we want to help you avoid these negative consequences. Read on to find out how you can avoid late payments.
How to Avoid Paying Late
1. Know the due date – and the grace period.
For most traditional mortgages, payments are due by no later than the close of business on the loan’s monthly due date (often the first of the month). It’s advisable that you pay earlier than that if you’re able, so that you know you make the due date.
However, in case you aren’t able to make your payment on time, most loans have a 15-day grace period during which your payment is late, but you aren’t penalized with a late fee. In other words, you won’t be hit with a late fee so long as you pay before the close of business on the 16th day of the monthly pay schedule. (Laws on late fees vary by state – check your mortgage agreement.)
Bear in mind that paying during the grace period should be the exception and not the rule. Do not regularly delay your mortgage payment until the middle of the month. Pay during the grace period only when you have no other choice.
2. Understand late fees.
When business closes on the 16th of the month (or whenever the grace period ends that month), if we have not received your mortgage payment, you will be charged a late fee. Be aware that a late fee can be up to 5% of your past due balance – so for an $1,800 payment, that’s $90. To learn more, look over our full list of potential fees.
3. Pay by autodraft.
Avoid having to think about making your mortgage payment by signing up for autodraft (sometimes called autopay or ACH withdrawal). That way, on a day of your choosing, your mortgage payment will be withdrawn from your bank account each month without you having to do anything further. To sign up for autodraft, download our Automatic Payment Enrollment Form and follow the instructions. You can also choose to pay monthly, semi-monthly or bi-weekly.
However, be mindful that your bank account has enough money in it to make your mortgage payment on the day it is charged. If we automatically draft a payment from your bank account and there aren’t enough funds in the account to make the payment in full, you could be facing an overdraft fee from your bank, nonsufficient funds (NSF) fees from us and late fees. Helpful tip: To avoid not having enough money in your account, schedule your autodraft payment for a day or two after your typical payday.
Read this article for more information about the benefits of autodraft.
4. Double check your bank account information.
The number one reason customers end up with late payments is often because of a simple error – they entered invalid bank account information when they initially gave us their bank account number or routing number. Always double check your account information to make sure it’s accurate.
5. Give yourself reminders.
If you don’t want to set up autodraft and you’d rather make your payments manually, it’s a good idea to set up reminders in your phone or write them on your calendar so that you remember to pay. Helpful tip: On whatever day you’ve designated to make your mortgage payment, don’t wait until the end of the day – make your payment at your earliest convenience.
6. Be aware of our cutoff times for processing payment.
Our payment systems have daily cutoff times, after which we can’t process your payment until the following business day.
- We must receive payments by mail no later than 3 p.m. EST.
- Website or phone payments must be received no later than 11:45pm EST.
7. Review your spending and cut nonessential costs.
When money is tight, look over your monthly expenses to see what can be eliminated. Making your mortgage payment should be a high priority. Also consider if there are ways you can quickly make more money in order to afford your expenses.
8. Call us.
If you’ve paid late, or even if you’re just worried you might make your payment late, give us a call at 866-317-2347. Though it can be hard to talk about financial struggles, we want to help if we can. For instance, if this is your first time making a payment late, or you haven’t paid late in 12 consecutive months or longer, we might be able to waive your late fee. We can also refer you to no-cost financial counseling services in your area.
If your question isn’t pressing, we encourage you to log into your online account and use the live chat function on your dashboard to speak with an online associate.
What to do if your payment is already late
If you’ve already missed the due date, there are ways to minimize the fallout:
- Reach out to us. Call us immediately at 866-317-2347 and tell us about your circumstances. We want to work with you, and we’ll do what we can to help you find a payment solution.
- Try to pay before the end of the month. Whether or not you’re charged a late fee, be aware we don’t report your late payment to the credit bureaus until it’s a full month past the due date – so you’ve got a little more time before the late payment affects your credit score.
Remember, even one late mortgage payment can affect your credit score – and cost you money. If you’re worried you might miss a payment, give us a call and we’ll see what we can do to get ahead of it.