To Pay or Not to Pay
By Diane St. James, © 2004

I recently had someone ask me if he was in a lot of trouble if he
were 30 days late on his mortgage payment. I told him not to worry
about the sheriff coming to his house the next day and putting a For
Sale sign up, but he should pay it as soon as he can.

I also recommended not letting it get to 2 months behind or his phone
will start ringing a lot, and you can bet it won't be someone
telling him he just won a million dollars, although he'd be wishing it was.

Mortgage companies are generally understanding if someone is just 30
days late-especially if the payment is in the mail. Just make sure
it IS in the mail. Mortgage payments in general are due the first of
the month, but there is usually a fifteen (15) day grace period in
which to get your payment there before you are slapped with a late
charge (usually 4%-5%).

When you are 30 days or more past due it will start getting reported
to the credit bureaus. If this happens, your credit score will
definitely start to drop. Once you are 2 months behind you may find
it very difficult to bring your mortgage current.

It is a good idea to call your mortgage lender, that is if they
haven't called you already, when you are 30 days late. Explain the
circumstances behind your problem and discuss alternatives or let
them know when you will be bringing your mortgage current.

Whatever you do, don't ignore your Lender if they do happen to call
you first. They have every right to contact you. After all, you
signed a Note at your mortgage settlement and that Note promised to
pay the obligation back to them in the monthly payments as
described. By the way, if you want to know what your late fee is, it
is written right there on your Note, if you want to dig it up. It
may also be right on your mortgage payment booklet or monthly bill
depending on what you get. I have a booklet myself and it indicates
right on it, what the payment is in order to include the late
charge if the payment is going to be received after the 16th. Gee,
isn't that nice of them?

Take a look at the heart of the matter too. Just why you are late on
the mortgage. Has there been a reduction in the number of hours you
work? Had there been an unusually large cash outlay last month, like
a tuition bill? Oops there went the mortgage payment and then some!

If you put a large downpayment on a car instead of paying the
mortgage, that was not the best choice to make...hope that car sleeps
four comfortably. The mortgage payment should always come first. It
is looked upon more favorably by lenders if someone has a perfect
mortgage record when they are going for a new mortgage, even with
some late payments on a car loan and some revolving debts. This is
because the mortgage lender is seeing that there is a history of
value placed on making sure the mortgage was paid.

If there is a major reason for the change in your ability to pay the
mortgage, such as the loss of a job without another job prospect on
the horizon, or due to a divorce situation, you should take a look at
all your alternatives as far as your mortgage and house are
concerned, but that's another article.

Needless to say my friend held a huge garage sale last weekend to
make up the rest of the mortgage payment he was short and made his
payment. He feels a lot better about it now and I was glad I could

Diane St. James is a mortgage professional with over 23 years
experience. Her website exists to help
educate people about the mortgage world. She is the author of 2
e-books, and has been quoted in the WALL STREET JOURNAL,
on, appeared on national cable new television CNBC, and was featured on a Cover Story for USA Today newspapers.