Delinquency is when you fail to make a payments on a loan on time. When this happens, the creditor will usually report the late payment to the credit bureaus. Having a delinquency on your credit report will hurt your credit score. The longer the payment is past due, the more it will hurt your score.How long has it been since you had late payments? If it has been 2 years or more since you were late and you have a good explanation for the delinquency then most lenders will still accept your file. If you have been late on payments in the past 6 months many lenders may see you as being too high risk and deny your application for credit. Lenders want to see good credit habits and paying on time is the best way to prove that you are credit worthy.
It is possible for home buyers with past delinquency history to obtain home financing. Many non-prime banks offer loan programs to home buyers with blemished credit profiles. Borrowers with delinquencies on their credit reports should expect to pay higher interest rates than conforming loan applicants.
When applying for a home loan, you may need to write a letter of explanation for all derogatory credit that appears on your credit report. Lenders like to see 24 months of clean credit.
It is sometimes necessary to accept a higher interest rate in the short-term and hope to refinance once the financial trouble has passed. A foreclosure will effect your ability to qualify for future mortgage financing more than a bankruptcy.
I you have to make late payments, try to make the late payments on something other than your mortgage.
Even if you think you will be falling behind on your payments, contact your mortgage professional to come up with ways to prevent this from happening. Your mortgage professional is an excellent source of information and should be able to assist you in a myriad of ways.
If you have proof in writing that your payment was made on time, the credit agencies are required to remove the late status. Send a letter explaining the error and your proof of ontime payment and your scores will go back up.
Once you are delinquent on your mortgage of more than 60 days some lenders can and may start the process of foreclosure. Foreclosure is when you are behind on your mortgage payments and the lender reposses your home from you. Normally the home will be sold through sheriff's auction. Lenders do not like to go through the foreclosure process because it is very costly and time consuming. So if you become delinquent on your mortgage or are about to become delinquent contact your lender to see if there is anything they can do to help you out or work with you to get caught back up.
While having a late payment on anything will certainly hurt your credit score, having a late payments on your mortgage will be viewed much worse than having a late payment on a credit card. The number of delinquent mortgage payments can almost play as large of a factor as your credit score in determining what programs and rates you qualify for.
