Posted by John Doe
While it’s alway important to stay on top of your mortgage payments, and make them on time, many homeowners don’t know that your mortgage payments actually have a grace period. This grace period–usually around 10-15 days–gives you a little bit of time to make your mortgage payment to the capital mortgage company. This can be really helpful to know and to factor into your payment strategy. You may be away on holiday, or funds may be tight until you get paid, and the grace period can help you during these times.
While most homeowners have their mortgage payments go out on the first of each month, some choose to make biweekly payments, or to split their payments between the 1st and the 15th of the month. Before utilizing your grace period, make sure you know exactly which date your payment is due, so that you can be sure not to exceed the grace period.
Grace periods can differ from lender to lender. Make sure you get a very clear answer as to when and how long your grace period is. For example, if you have a fifteen-day grace period and your payment is due on the first of the month, then you have a window between the 1st and 15th in which to make your payment. Missing a payment can come with high penalties so you’ll want to make sure you make it well within your grace period. Once you’ve established when your grace period is, and it’s duration, you can safely use the grace period.
Something to ask your lender about and watch out for is how interest works during your grace period. This depends on the kind of loan you have with the capital mortgage company. Some loans will allow you to not accrue any additional interest until the grace period is over, while some will charge interest every day past your due date. This is really important to know, as you definitely want to avoid accumulating extra interest. If you are charged interest during the grace period, it is worth trying to get your payment in on time each month, only using the grace period as a last resort or back up option.
While the grace period doesn’t necessarily protect you from paying interest, it will protect you from a late fee. As long as you pay your bill within the grace period, you cannot be charged any late fees or penalties. Again, make sure you know the exact terms of your grace period.
If you are paying for the first time, make sure all automatic payments or online billing services are properly set up and go out on the correct date. You want to ensure that you don’t end up making a late payment because your automatic billing is delayed. Of course, it’s wise to make your payment as close to your original due date as possible, rather than leaving it until the very last day of your grace period, but sometimes circumstances can make it unavoidable.
If you are concerned about making your payment within the grace period, it’s better to get in contact with your capital mortgage company ahead of time. This can save you from having to pay your full late penalty, as your lender may be able to offer a solution, depending on when you will be able to get your mortgage payment in.
Getting your mortgage payment in on time and within the grace period is essential to staying in your lender’s good graces, maintaining your credit score, and avoiding penalty fees. You should also make sure you know exactly what kind of late fees you will face in the (hopefully) unlikely event that you are late with a payment.
Some lenders charge a flat fee for lateness, while others may take a percentage of your loan payment. If there is a flat fee and you absolutely cannot get your payment in on time, then at least you will be able to budget for it and know exactly how much you’ll be paying. If your lender charges a percentage, this could potentially hit you much harder, especially if you’ve taken out a very large loan.
Another thing to be aware of is that if your mortgage payment is over 30 days late, your lender can report it to the credit bureau. This can result in a drop in your credit score, which will negatively affect your ability to take out loans or lines of credit in the future, so it’s important to make sure you don’t make paying late a habit!
Ideally, everyone would be able to make their mortgage payments perfectly on time. But we don’t live in a perfect world, and sometimes circumstances get in the way. Knowing about your grace period, and exactly how long it is, can help you should a situation arise in which you can’t make your payment on the due date. Make sure you understand completely how your specific grace period works with your lender, as well as how any late penalties or interest works as well, just in case.