How Many House Payments Can Be Missed Before Foreclosure?
At Purple Mountain Holdings, we understand that difficult situations happen in life. In the event that a homeowner cannot keep up with monthly payments on a mortgage, they are at risk of foreclosure.
Foreclosure is a legal process in which the bank or lender that set the mortgage and holds the contract will repossess the property and take back ownership of the home. The homeowner unable to make payments is no longer holding up their end of the agreement, and this is actually a violation of the mortgage contract, so the lender has the advantage.
Foreclosure is a situation any homeowner should avoid. However, there are companies like us that can help homeowners before foreclosure notifications begin. Foreclosures not only cause an unnecessary amount of stress, but they also damage a person’s credit. A bank or lender might not work with that person again in the future, and immediate eviction is a huge consequence as well.
So How Many House Payments Can Be Missed Before a Homeowner Is at Risk of Foreclosure?
This answer actually varies from state to state and even lender to lender. Based on our research though, most lenders give a grace period of around 120 days, or three to four months.
Please note that it is extremely important for any homeowner to understand the specific terms and conditions of their personal mortgage agreement and lender situation.
What Happens If a Mortgage Payment Is Missed?
A mortgage is a contract. It is a legal agreement that a person makes with a bank or lender to purchase (or refinance) a home and property. This is a great situation in the case of a person interested in buying a home who does not have the cash to pay for that home in full up front or does not want to make that large of a payment at one time. Mortgages allow homeowners to pay for a home and property over a long period of time through required monthly minimums.
Mortgage agreements are typically written for 20+ years and have an interest rate attached to them to account for market and economy shifts over decades. Buying a home that is affordable and agreeing to a mortgage’s monthly amount, length, and interest rate should be based on a person’s annual income and accurate living expenses.
Usually, a home buyer is required to put down a significant percentage of the home’s worth to show good faith, and then the mortgage covers the remaining cost. An overly simplified example is that on a $200k home, a buyer might put down 10%, or $20k. In this case, the mortgage will be $180k over something like 25 years with a fixed interest.
So What Actually Happens If a Homeowner Misses a Mortgage Payment?
A mortgage payment is typically set up month to month. Just like with any other bill, a homeowner will receive a notification and will have to pay the bank or lender within a certain amount of time to stay in good standing.
If a mortgage payment is accidentally forgotten, most banks and lenders have a grace period of 10 to 15 days, again like most normal bills. A homeowner simply needs to complete the payment within that grace period, and there is usually a late fee attached to it as a penalty.
If a missed payment happens again or if a payment is not made within the grace period, the bank or lender starts to get worried, and usually, an account is flagged. At this time, a homeowner is probably receiving multiple notifications for missed payments, and phone calls will begin to collect payment.
Ignoring notifications and phone calls only makes a situation worse. Many banks and lenders are actually open to discussing a person’s financial situation in the event of a nonpayment. There might even be an opportunity for a reduction in payment or a relief period or extension.
If a bank or lender sees no action on a homeowner’s end though, that’s when a foreclosure situation becomes a risk.
We Buy Houses
If you or a loved one owning a house in the Colorado Springs area is at risk of foreclosure, the team at Purple Mountain Holdings is here to help. Our goal is to help you sell your house fast. Our dedicated and professional agents are here to give homeowners a fair price without the hassles and the wait time.
Call us or contact us online to tell us a little more about the situation and get a cash offer. We also have a convenient chat line available to answer any questions you might have throughout the process.