Late Mortgage Payments: How and How Much They Can Hurt


Late Mortgage Payments: 
How and How Much They Can Hurt 


From client info, applications, communications, mortgage industry news, marketing ideas, to social media and more, it seems like I'm reading all the time these days.  The gathering (and sharing) of info is vitally important for an LO. 

 Get the facts! Contact me today!
But as many have found ... and is being energetically discussed currently ... the info found on social media can be a mixed blessing.  An unbelievable wealth of valuable info is out there, but then there's a whole lot of ... well, let's just call it "unreliable and erroneous" info too.  

When that unreliable and erroneous info is financial, credit, or lending in nature, it can have consequences.  And it definitely catches my eye, so I try to address this issue head-on by blogging and sharing the correct facts.   

As you probably guessed at this point, something I recently read did just that and it motivated me to write this post.  What was it?  It was a tweet containing a link to info regarding late mortgage payments.  

The source of the info shared within the tweet was a well-known organization.  One relied upon heavily by professionals within our industry and consumers alike.  

Now I believe it's likely that many read the info contained in the tweet's article.  They probably assumed the info was correct.  

Being kind, I'd say the info provided within the tweeted article misleads consumers into:

  • Thinking the damage done to their credit by a late payment could be minimal or easily absorbed
  • Being lulled into a false security. One that possibly keeps them from making an immediate/needed payment 
  • Not taking immediate action of any kind 

Consumers need to know that ... depending on the consumer, the consequences felt from a late payment could range from mildly damaging to severe. 

What the article in question did not address was two-fold:  

     1.  The article did not stress strongly enough that, like many other facets of credit and mortgage financing, the damage wreaked by a missed mortgage payment can vary greatly between one consumer and another. 

For that reason, it's vitally important that anyone about to miss a mortgage payment talk to their Loan Servicing Company, or YOUR Personal Mortgage Lender, immediately.  That way they get personalized factual info and guidance in order to move forward ... but to also lessen any credit damage that might be done.  

If a consumer is hoping to finance a new home in the near future:  The need to talk to a Lender regarding any late mortgage payment(s) becomes even more intense.  

The TIMING (and success) of any future mortgage application could rely heavily on how recently a late mortgage payment was made.  Again, a Lender can provide timely info and guidance that will best assist in securing better credit health and future mortgage approval. 

     2.  The tweeted article also did not raise this important fact:  Depending on the type of loan being applied for,  underwriting rules regarding mortgage approval can vary.  

     Example:  What is true for Conventional Mortgage underwriting/ applications varies from those of FHA underwriting/ applications.

Now you know why I always say it's so important to seek the expertise of a Mortgage Lender.  One that understands credit issues fully and has experience in dealing with them successfully. 

With that said, below you will find some very basic answers to the following questions regarding Late Mortgage Payments: 

 Need Mortgage Answers? Need Assistance? Contact Me!     1.  What constitutes a late payment?  

     First, it's important to understand the difference between an overdue payment ... and one that is actually late.

     An OVERDUE payment:  

     Most Lenders or mortgage servicers provide you a "grace period" in which you can still make your mortgage payment without actually being considered "late".  
     Mortgage payments are typically due on the 1st of each month, with a grace period extended you of approximately 15 days.  You may be assessed a penalty for making your mortgage payment during this grace period, but most likely you are not in danger of being reported to the credit bureaus.
     
     A LATE payment:

     A payment is considered late when it is not made within the month it is due.  (That means actually in the possession of the Lender/mortgage servicer, not the postmark or "sent" date of a check or payout from your bank.   
               
     2.  When do Lenders report a late payment(s) to the Credit Bureau?

     Lenders typically report late payments to the credit bureaus once they are 30-days past their due date.  

     3.  How does a late payment affect your Credit Scores?

     Here is where the asterisks start flying and the individual consumer's personal credit history becomes so important.  Why?  
     The credit standing you hold prior to your late payments influences how much a "hit" you receive to your credit scores.  Plus, the more/longer late payments reported, the more severe your credit is affected.  The recipe for the "hit" is very personal to your individual debt and credit.

     4.  How does a Mortgage Underwriter typically view a late payment ... and can that late payment affect Mortgage Approval? 

      Ironically, when in the mortgage process, the more recent the 30-day late payment is, the more damaging it is to your credit ... and the more likely it is that it will hurt your chances of receiving mortgage approval to buy (or refinance) a home.
     
     Remember I mentioned above that the type of mortgage you apply for dictates how Mortgage Underwriters will view late payments?  I refer to the "recipe" concept once again here.  

     The credit standing, debt, and finances of each consumer applying for a loan are unique to them.  The same can be said as to the results reaped by a late payment(s).  

All of the above only highlights even more (yes, I stress it once again) the absolute need to work with an experienced LO during what is a more challenging mortgage application.  

And it only elevates the importance of sharing correct information with consumers, as the mortgage process can be confusing enough without consumers and future mortgage applicants receiving old, untimely, or erroneous information that does not pertain to their specific borrowing scenario.  

For the best results, answers to your questions, most personalized facts, guidance, and assistance ... reach out to a Lender.  Whether it be for information regarding your credit or late payments. Whether it be about buying a new home or refinancing your current one.  

Don't hesitate and don't wait ...

 Contact Me Today!
* When in need of Mortgage info or service when buying or refinancing a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me. I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
I'm easily found at:


Gene Mundt

Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
NMLS #175656


Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281

 Get Answers! Get a Quote!

   


Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed













Real Estate - Financing Juggling: Selling & Buying a Home at the Same Time

Real Estate - Financing Juggling:
Selling & Buying a Home at the Same Time


The definition of juggling is ...  

A continuous tossing into the air and catching 
(of number of objects) so as to keep a minimum 
of one in the air while handling the others ...

For those trying to sell a home while buying another,
Juggling a Home Sale & Home Purchase? Contact Gene!
it can feel just like that ... a juggling act requiring great timing, luck, balance, and concentration.

Back in the late 1970's when I was a rookie loan officer, the practice of selling and buying a home simultaneously was a fairly common practice.  Not so anymore.  

There are many reasons why this has become true, but one stands out most.  Available housing for sale is in short supply creating very competitive buying scenarios in many markets.  

In these competitive housing markets, Sales Contingencies won't cut it come Offer time.  Sellers typically won't consider Offers/Contracts that contain them.  They don't have to.

It's also true that the process of selling and or buying -financing a home is now more detailed too.  Many people are just not keen on "juggling" everything at once.  They prefer to consider, then learn, then tackle one step at a time.  

Those steps should include:  

  • Seek housing and financing counsel & advice
  • Sell their current home
  • Secure Mortgage Pre-Approval 
  • Search and find their new home
  • Sign a Contract to Buy

To assist them in accomplishing this, I, as their Mortgage Originator, must have a complete and thorough understanding of their financial/credit background and standing.  In the sell-and-buy scenario, there are additional questions and considerations (beyond the norm) that must be raised and discussed in order for my clients to make the most beneficial decisions for themselves moving forward.  

Some of those questions can be:
  • How quickly are homes selling in their current home market?
  • What are comparable homes selling for in their area?
  • Does the market support a "Contingency Offer" being made on their   new home, should their current home not sell immediately?
  • What is the likelihood of that Contingency Offer being accepted by Buyers?  
  • What amount of equity do they hold (if any) in their current home?
  • If necessary, could they sustain TWO mortgage payments, should their home not sell?
  • How long could they sustain 2 home payments?
  • What is their personal comfort level with this possible scenario ... their "risk tolerance"?
  • What kind of cash reserves/savings do they have available?
  • If your current home sells prior to your finding a new one, do you have somewhere you can stay in the interim prior to Closing?  Rent, etc.?  
  • More ...

My focus as their LO must also remain on their education. It's very important for them to know the facts regarding all their financial options and the costs of selling and buying their home.  

It's at this point that I find many Home Sellers are surprised there are Seller's Costs involved in the sale of a home.  And specifically, what those Seller's Costs will total for them.

Costs that remain the responsibility of a Home Seller in the Chicagoland/IL area typically include:
  • Real Estate Commissions (if Agent(s) services utilized
  • Title Company expenses
  • Attorney Fees (if Attorney services utilized)
  • Contractual Items (if involved in Sale/Contract)
       1.  Survey
       2.  Termite Inspection
       3.  Home Warranty Costs 
       4.  Home Inspection Repairs
       5.  Real Estate Transfer Taxes/Fees
  • Real Estate Tax Proration (owed to Home Buyers at the time of Closing)
I'm sure other locations/states have other Sellers' costs that could be included in this list, but again ... these are costs often seen in the Chicagoland/IL housing market(s).  

Typical Seller Costs can range anywhere from 8% to 10% of the Contract Price and are dependent on the costs agreed upon in your specific transaction ...  

Example:
Sales Price = $200,000
Typical 8% to 10% Seller's Costs = $16,000 to $20,000

So how do you calculate the Net Proceeds you'll realize from your home sale? 

Example:  How to Figure Net Proceeds
Sales Price
- (minus)
Total Seller's Closing Costs 
- (minus)
Current Home's Mortgage Balance
= (equal)
Final Net Proceeds of Home Sale

The dollars represented by your Final Net Proceed represents the money available to you for your next home purchase (for Down Payment and Closing Costs). 

The above calculations, the menu of costs (both sales and purchase), the variety of possible sales/purchase scenarios and options, and need for information and sound advice ... reveal the vital importance of seeking and working with experienced professionals (both Mortgage and Real Estate).

My strong recommendation is:  Always seek that professional guidance and info PRIOR to taking any action regarding the sale of your current home or purchase of a new home.

To assist in your search for info, please consider reading my posts:



Bottomline:  Make sure you take the time to ask questions. Get fully-informed.  Then make your decisions.  You'll be glad you did. 


 Questions? In Need of Advice? Contact Me Today!
* When in need of Mortgage info or service when buying or refinancing a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me.  I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.  
I'm easily found at:

Gene Mundt

Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
NMLS #175656

Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
 Get Answers! Get a Quote!
   

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed








 

Mortgage Escrow Accounts: What are They and What Options Do I Have?



Mortgage Escrow Accounts: 
What are They and What Options Do I Have? 

 Have Questions? I Have the Answers You Need!The topic of "borrowing power" and questions surrounding "how much home I can buy" are raised almost immediately by prospective mortgage clients during our first conversation together ...  

It's understandable and natural.  They're excited and anxious.  That's especially true when the client is a first-time home buyer.  

Most are laser-focused.  Their ultimate goal is to find out:  What's the maximum amount of money I can borrow?  Or when purchasing, the question is often simply, "what price of home can I view"?  Again, that's understandable.

But while that information is certainly a portion of what must be discovered and explained during our conversations (and ultimately during the Pre-Qualification/Pre-Approval process), in actuality, it's not the dollar amount or Sales Price of homes they should be most concerned with.

No, their focus and concern should really be on the dollar amount or total Monthly Mortgage Payment they can qualify for.  A payment that will be dictated by several things, including:
  • The Sales Price of the home being considered 
  • Real Estate Taxes on that specific property 
  • The cost of the Homeowner's Insurance coverage needed for that property 
  • If Mortgage Insurance is needed in order to purchase the home  
  • If an HOA Fee (Homeowners Association) comes with the specific property being considered

I've touched upon this important topic previously, most recently in my post, "How Buying in a Homeowners Association Can Affect Mortgage Approval and Monthly Payments".  But the crux of this post (and others I've written) center around:


How the choice and location of your home purchase 
can affect your "purchase power" and subsequently, 
your qualifying mortgage payment.  

This is truly the "bottom line" when seeking financing and Mortgage Approval.  It's a topic you and I will revisit often as you navigate your search for your home.  During your search, I'll make sure you have all the information you need to seek a home that's a good financial fit ... plus provide you sound guidance to help secure a successful Mortgage Approval.


 Discover your Mortgage Options .. Contact Me!

Below you'll find a breakdown showing what comprises a Monthly Mortgage Payment and an explanation of each component:



The basic components: 
       1.  Principal and Interest Payment for the loan (P&I)
            Per the Consumers Financial Protection Bureau:  The principal is the amount you borrowed and have to pay back, and interest is what the Lender charges for lending you the money

       Escrow Accounts typically include these expenses:       
     2.  Real Estate Taxes  (1/12th of Annual Tax Bill)
       3.  Homeowners Insurance  (1/12th of Annual Premium)
       4.  Mortgage Insurance  (PMI or MIP, if applicable)

      *  Note:  Homeowners Association Fees: (HOA, 1/12th of Annual Fee, if applicable), are factored into the Housing Expense Consideration for Debt To Income Ratios (But NOT Escrowed), and are paid outside of the Mortgage - typically to a third party Management Company of Homeowners' Association.

Item numbers 2, 3, and 4:  Are items considered in the "Escrow".  In the State of Illinois, Escrow means "any account established by the mortgage lender in conjunction with a mortgage loan on a residence, into which the borrower is required to make regular periodic payments and out of which the lender pays the insurance and taxes on the property covered by the mortgage"(Illinois Mortgage Escrow Account Act)

Escrow payments are collected monthly by the Lender (or Mortgage Servicer) via the Monthly Mortgage Payment, then disbursed/paid-out after accruing in the Escrow Account.  


  • Real Estate Taxes are paid out as tax installments become due during the year  
  • Insurance is paid upon the annual anniversary/renewal date of the insurance policy

FYI regarding Insufficient Escrow Balances:  If the Escrow Balance is insufficient to make a payment, the Borrower is notified, and required to fund the Escrow with a lump sum payment ... or an acceptable increase in the  Monthly Escrow Payment to "catch up" on the shortage during the upcoming calendar year.

In most cases:  Mortgage Lenders REQUIRE that a Borrower maintains an Escrow Account when they do NOT have a 20% Down Payment (or hold  20% or more Equity in the financed home). 

For Borrowers financing in Illinois:  Once the Borrower has paid down their Mortgage Balance to 65% of the original loan amount, the Mortgage Lender is REQUIRED TO NOTIFY the Borrower of their Right to Terminate their Escrow Account ... provided that the Borrower is not in default on their Loan. 

The Borrower can choose to continue their Escrow Account if that serves their needs best.  But at this time, they also have the option of assuming the responsibility for payment of their Real Estate Taxes and Homeowners Insurance (and any HOA Fee) moving forward.  (This waiving of Escrow Account should/must be agreed to in writing for the Borrower's protection.)

For Borrowers making an initial Down Payment of 20% or more at the time of financing:  These Borrowers have the option of paying into an Escrow Account ... or paying Real Estate Taxes, Homeowners Insurance, and HOA Fees (if included) on their own.  This is agreed upon prior to Closing.  

For those Borrowers Refinancing their Mortgage:  Borrowers refinancing at 80% or less of Appraised Value have the same option to waive Escrow.  Again, this must be agreed upon prior to the Closing of their loan.

Escrow ... and how it fits into your home search, home buying, and future Mortgage Payment ... is just one of many things Borrowers need to know and understand.  It's important to seek and find a Loan Officer that will take the time to answer questions, fully explain your options, and help guide you through each step of your financing process.   

Then you will know upon completion of your Closing that you made informed sound decisions for yourself and financial future ...


 Have Questions? Contact Me Now!
* When in need of Mortgage info or service when buying a home in New Lenox - elsewhere in Chicagoland - IL & WI, contact me. I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
I'm easily found at:



Gene Mundt

Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
NMLS #175656


Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
 Get Answers! Get a Quote!

   


Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed

Late Mortgage Payments: How and How Much They Can Hurt

Late Mortgage Payments:  How and How Much They Can Hurt   From client info, applications, communications, mortgage industry news, ma...