How to Understand Mortgage Lates on a Credit Report

Most people know that mortgage lates bring down their credit score, but mortgage lates also negatively affect people in other ways. Mortgage companies take several things into consideration when deciding on an interest rate for a new mortgage loan. The main things they look at are the mid FICO score (lowest mid score for joint loan applications), late mortgage payments in the past 24 months, and income to debt ratio. If you're thinking about getting a loan modification or new mortgage, keep in mind how mortgage lates will affect your loan.

Difficulty: Easy

Instructions

1. Understand how mortgage lates are used by lenders to increase interest rates. Mortgage lates on FICO credit scores are reported as 30, 60, and 90 lates. They decrease your FICO score significantly especially if they're recent. If mortgage lates are made continuously one month after another, the lender sees these as rolling lates. Rolling lates are detrimental to credit scores and to people trying to get a mortgage or loan modification. When a person is looking to refinance or purchase a home, the interest rate rises significantly depending on the lender's criteria and the breakdown of mortgage lates. One 30 day late in the last 24 months will raise your interest rate a little. If you can write a letter of explanation with a good excuse, the lender may disregard the late payment.

2. Understand the time line of mortgage lates and their effects on your credit report. Additional mortgage lates more than one 30 day mortgage late will raise your interest rate significantly and affect your ability to refinance. Mortgage lates typically come off credit reports in 24 months. If you need to get a mortgage loan, you will want to get mortgage late payments off your credit report before refinancing or purchasing a new home. The longer the mortgage lates are on your report the easier it is to get them off. The best way to get older mortgage lates off your FICO credit report is to find a reputable credit repair company. If you are negotiating a loan modification, make sure to ask your lender if the loan modification payments will be reported to the credit bureaus as late payments.

3. Understand how late mortgage payments affect the foreclosure reporting process to the credit agencies. Mortgage companies generally delay reporting foreclosures to credit bureaus at the beginning of the foreclosure process. The longer you are in foreclosure, the higher the chance your lender will report it. A foreclosure on a credit report can be as bad as a bankruptcy. Most lenders will not finance a home for someone who has a foreclosure on his or her credit report. If you're in foreclosure and getting a loan modification, ask your lender if the foreclosure is on your credit report. If it is on your credit report, ask them if they will remove it after you make your mortgage payments on time for a while. Make sure to avoid mortgage lates in the future.

Tips & Warnings

• Mortgage lates on a credit report will raise interest rates and cost thousands of dollars over the life of a new loan.
• For the best mortgage rates, mid credit scores need to be approximately 720 and higher with no late mortgage payments.
• Mortgage lates are reported to credit bureaus as soon as they are 30 days late.

Resources

• Mortgages for Dummies - Book at Amazon.com
• The Loan Modification Handbook - Book at Amazon.com

[goodselfme]

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