Ask a Mortgage Broker

Ask a Mortgage Broker

What Happens If I Miss a Mortgage Payment?

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There’s a lot you need to know when navigating the world of mortgages.

And, if you’re not careful, it’s quite easy to get tripped up in the lingo, the procedures, and the payments. (Not to mention the penalties.)

Which is why we’ve recruited Jerome Trail, owner and broker of record at The Mortgage Trail, to answer the most important questions homebuyers and homeowners should understand before moving forward in their mortgage process.

Today, Trail is offering the answer to the inquiry: “What happens if I miss a mortgage payment?

READ: What Happens If I Want to Sell Before My Mortgage Term Ends?

To be frank, needing to miss a mortgage payment isn’t an ideal situation to find yourself in. As for what happens if you must, well…

“The short answer – nothing good,” Trail begins. “Technically, you are in breach of the mortgage contract’s terms and conditions.”

Just how far might the ripple-effect of your missed payment reach in terms of your finances, you might wonder? Trail explains that when you miss a payment, your lender will inform the credit bureaus as such, which could impact your borrowing abilities in the future.

“Depending upon the specific lender’s terms and conditions, you will need to make that payment up as soon as possible,” Trail goes on. “An extended period of missed mortgage payments will probably end up with the property going into a foreclosure process.

Describing it as a “worst-case scenario,” Trail explains the foreclosure process as how a lender attempts to recoup the lost funds of a loan agreement’s terms. In extreme cases, this process can result in you losing your home.

But, if you find yourself in a financial situation wherein making your monthly mortgage payment isn’t possible, it’s not all doom and gloom.

“The most important takeaway, if you are going to be late for a payment, is that you should call the lender as soon as you can to try and forward-manage the situation and to try and work out a solution,” says Trail. “The vast majority of lenders have no interest in the foreclosure process, as that is costly and cumbersome.”

What’s more, according to Trail, you needn’t feel like you’re the only person in history who’s struggled to make a mortgage payment. If you, as suggested, get ahead of the issue, your lender may be even more understanding (and helpful) than you imagine.

“You would not be [your lender’s] first client to be a little late on a payment, and they will probably suggest a couple of possible solutions to try and work things out and accommodate your short-term cash-flow issue.”

In summary, when the time comes around to make your monthly mortgage payment, you ought to.

And if you absolutely can’t, you ought to keep your head up, your communication honest, and your plan of action at the forefront.

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