What Is the Grace Period for Paying Home Loans?
Most homeowners want to avoid late fees when paying their home loans. Late payments not only cost you, but they can also result in a negative mark on your credit report and bring your score down. Your mortgage statement clearly indicates the date your payment is due, but most lenders provide a grace period before marking the payment late or applying late fees.
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Definition
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Mortgages are generally due at the first day of each month; however, lenders may extend a grace period of 15 days to the homeowner. A grace period is defined as the period of time in which the loan payment may be made after its due date without penalties or late fees. Grace periods apply to mortgages on which the interest is calculated monthly, not on simple interest mortgages, which accrue interest daily. According to Lending Tree, a payment received on the second day of the month is technically late, but the lender will not report it to a credit bureau or apply late fees if the payment is received before the 15th of the month.
Penalties
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If, after the grace period is over, the lender has still not received your home loan payment, it may mail a late notice to you and impose a penalty, which is tacked onto your next month's mortgage statement. Late fees can run as high as $35 and are clearly spelled out on your loan documents and mortgage statements. Most lenders won't impose a late fee or penalty or report a late payment to the credit bureaus until the grace period ends.
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Reporting Late Payments
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If your lender still has not received your mortgage payment after 30 days, you will likely be reported as late to the credit bureaus, TransUnion, Experian or Equifax. Late mortgage payments can have a devastating effect on your credit score, causing it to plummet several points. For that reason alone, it's best to get your payment to your lender as soon as possible.
Proof of Payment
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Any bill payer would like to think that if a payment is sent through the mail, it will arrive safely and on time; however, unless you send the payment with a service that provides a receipt -- such as certified mail -- you simply have no proof that your payment has been received until the lender cashes the check. Ask your lender whether it has an automatic debit option, which will take the mortgage payment out of your bank account on the same day each month.
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