How many mortgage payments can you miss before foreclosure?

Missing a mortgage payment is a stressful situation, riddled with potential consequences like late fees, a hit to your credit score, and even the threat of foreclosure. However, paying within the grace period or missing one payment is not an immediate cause for distress.

Alternatively, if you expect to miss additional payments due to financial hardships, then it's important to understand the impact of going delinquent. In this post, we'll explore what happens if you miss a mortgage payment, the timeline for potential foreclosure, and solutions to avoid foreclosure. 

What happens if you miss a mortgage payment?

If you miss one mortgage payment, there's no need to panic. Although it's not good practice, most lenders have a 15-day grace period during which you can make your payment penalty-free. Paying within this grace period can help avoid late fees and negative impacts on your credit score.

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However, failing to pay within the grace period—and beyond—can trigger more serious consequences. After 30 days, your loan servicer will report your missed payment to credit bureaus, and it will appear on your credit report. You’ll also begin to incur fees on your debt, which range from 3% to 6% of the total amount due. 

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At 36 days past due, your loan provider will try to connect with you about your missed payment and offer 30 days to pay your balance. If they cannot connect with you, you’ll receive a letter outlining your delinquency and a demand to pay your balance, interest, and fees in full to avoid foreclosure proceedings.  

How many mortgage payments can you miss before foreclosure?

You can generally be delinquent for 120 days or miss four mortgage payments before foreclosure begins. However, the exact timeline for foreclosure varies across states due to varying laws and regulations. 

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In most cases, 90 days is considered the start of the pre-foreclosure process, at which point you’ll be sent a notice of default.

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Ignoring the notice of default can lead to a lis pendens, a legal notice that alerts other lenders about a possible lawsuit against your property. This can make securing new financing, such as a credit card, harder. Moreover, it can appear on a title search, affecting your ability to sell or refinance the property. 

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At 120 days, your lender will place a lien on your property and start foreclosure proceedings. 

Solutions if you’ve missed mortgage payments

Whether you’re in pre-foreclosure or facing foreclosure, you have options to help you keep your home.

Work with your lender

If you've missed a mortgage payment, the first—and most crucial—step is to take control of the situation by contacting your lender. Because foreclosures are costly and time-consuming for banks, they'll have a strong incentive to work with you on a solution. 

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Although it can feel intimidating, if you can be proactive, you'll have better options to explore. A few solutions include:

• Forbearance: A lender may be willing to offer you short-term relief by temporarily pausing or reducing your mortgage payments for a period of time. Once the forbearance period ends, you’ll have to repay they payments you’ve missed either in a lump sum or through a repayment plan. 

• Repayment plan: If a hardship caused you to temporarily fall behind on your mortgage, but you can now afford to resume payments, a repayment plan is a good option. Under a repayment plan, your lender lets you catch up on missed payments by spreading them out over a set period. These payments are in addition to your regular monthly payments. 
• Loan modification: A loan modification involves changing the terms of your mortgage. This can include extending the loan term, reducing the interest rate, or even changing the loan type to make the payments more manageable. It's best for homeowners who need long-term relief. 

Refinance 

When you refinance your mortgage, you replace your existing loan with a larger one and pocket the difference in cash. The new mortgage will ideally have better terms, like a lower interest rate or a longer repayment period. 

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Refinancing can give you the funds to get current on your mortgage and the opportunity to lower your monthly payments, making it easier to stay current. 

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It can be challenging to qualify for a refinance if missed payments are negatively impacting your credit score or foreclosure has been initiated. So, it's best to connect with your bank and shop around to compare other lenders. 

Leverage home equity

With every mortgage payment, you've built equity in your home—a major advantage to homeownership. If you hold 20% or more, you can tap into your home’s wealth to catch up on missed mortgage payments. 

• Home equity loans: A home equity loan allows you to borrow a one-time lump sum. Repayment consists of set monthly payments over typically a 10-year term. If taking on an additional monthly obligation will drive you further into financial hardship, a home equity loan may not be right for you.
• Home equity lines of credit: Home equity lines of credit, or HELOCs, let you borrow funds as you need through a revolving line of credit. The draw period can last up to 10 years, and you’ll be responsible for interest-only payments at the time. Once the draw period ends, you’ll be on the hook for a monthly loan payment.
• Home equity investment: A home equity investment (HEI) gives you a single lump sum payout in exchange for a share of your home’s future appreciation. There are no monthly payments. Instead, you repay the investment any time during a flexible 30-year term when you decide to sell, refinance, or use other cash reserves. HEIs are an accessible form of financing—there are no income requirements, and the minimum credit score requirement is 500. Unfortunately, you can’t get an HEI if you’re over 30 days delinquent on your mortgage. 

Apply for a 401(k) hardship withdrawal or loan

A 401(k) hardship withdrawal helps you leverage your nest egg penalty-free, but only in the event of "immediate and heavy financial need." 

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One qualifying hardship is withdrawing funds to prevent foreclosure or eviction. If your lender has initiated foreclosure proceedings, reach out to your 401(k) plan provider. They can guide you through eligibility and the process. 

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A 401(k) loan allows you to essentially borrow from yourself. You can take out a loan up to a certain percentage of your vested balance. Then, you’ll have to pay yourself back within five years. 

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In either case, it's worth connecting with a financial advisor. They can help you weigh the pros and cons of dipping into your retirement account early. 

The bottom line

Missing a mortgage payment, seeing your credit score decrease, and facing foreclosure can all feel overwhelming, but it’s important to remember that it’s not the end of the road. By staying proactive and informed, you can take control of your delinquent status to navigate a solution and keep your home for years to come. 

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