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Plynck
12-07-2005, 12:14 PM
I have a mortgage with a reputable national mortgage company. My monthly statements tell me that the payment is due on the first day of the following month at a particular dollar amount. It then gives a second date (the 15th of the following month) after which I will be assessed a late fee. The obvious assumption is that I may make my normal payment amount anytime up to being received on the 15th. If I log onto my account to make a direct payment, I have the ability to make a payment on the 1st, or after that up to the 15th.

I am confused. I read in a real estate column that mortgage payments are in arrears (as opposed to rent which is in advance), and that technically any payment made after the 1st of the month (or whatever date it is due) is late.

My question: Is any payment received after the due date considered to be late, even if there is no fee attached. Or, more to the point, am I an idiot for making my payment on time when I have a week or two more to keep the interest? And is there a risk to my credit rating by paying after the 1st, but before the 15th?

nivlac
12-07-2005, 12:17 PM
I have a mortgage with a reputable national mortgage company. My monthly statements tell me that the payment is due on the first day of the following month at a particular dollar amount. It then gives a second date (the 15th of the following month) after which I will be assessed a late fee. The obvious assumption is that I may make my normal payment amount anytime up to being received on the 15th. If I log onto my account to make a direct payment, I have the ability to make a payment on the 1st, or after that up to the 15th.

I am confused. I read in a real estate column that mortgage payments are in arrears (as opposed to rent which is in advance), and that technically any payment made after the 1st of the month (or whatever date it is due) is late.

My question: Is any payment received after the due date considered to be late, even if there is no fee attached. Or, more to the point, am I an idiot for making my payment on time when I have a week or two more to keep the interest? And is there a risk to my credit rating by paying after the 1st, but before the 15th?
Easy question. You have up to the 15th to make your payment. However, it'd behoove you to make a payment that will make it to the mortgage company by the 15th, i.e., it's not the postmark; it's the receipt that matters.

dolphinboy
12-07-2005, 12:20 PM
You are an idiot... well, that's a little harsh. I have been making my mortgage payments on the 12th of each month (by mail) for the past 20 years and have never seen it noted as "late" on any credit report I have seen. This is across numerous mortgage companies.

Why they provide you this "grace period" I can't say, but make sure you don't cut it too close or you won't get it there by the 15th and they will hit you with a late fee.

Direct deposit makes it much easier...

CookingWithGas
12-07-2005, 12:43 PM
My BIL is president of a title services company and during settlements they always make the point to tell you that missing the due date could result in recording a late payment even if it is before the date where a late fee is charged. Notwithstanding dolphinboy's experience, a bank would be well within its rights to report a late payment in those circumstances. I do not know how common it is in the industry to actually report such a payment as late, but I suspect it is uncommon.

You are an idiot... well, that's a little harsh. It's more than a little harsh, it's totally inappropriate for GQ.

Shagnasty
12-07-2005, 12:45 PM
Like others said, you have until the 15th with no penalty. The earliest late payment occurence that gets reported to credit agencies is 30 or more days late. There is no problem there. I am also pretty sure that there isn't a financial penalty either. I pay mine late every month and I have never seen a problem.

Shagnasty
12-07-2005, 12:47 PM
Notwithstanding dolphinboy's experience, a bank would be well within its rights to report a late payment in those circumstances. I do not know how common it is in the industry to actually report such a payment as late, but I suspect it is uncommon.

It's more than a little harsh, it's totally inappropriate for GQ.

That is completely false. Take a look at your credit reports some time. There is no place for late payments that are paid less than 30 days late.

Dag Otto
12-07-2005, 12:54 PM
Or, more to the point, am I an idiot for making my payment on time when I have a week or two more to keep the interest?


I think this depends on how the interest on the loan is calculated. If the outstanding balance that the interest is based on isn't reduced until the payment is received, then it seems that you are actually paying more interest on the loan rather than keeping it.

aahala
12-07-2005, 12:56 PM
I know the probable beginnings of the grace period. Lenders at one time had
to calculate the interest by hand, so they sometimes used slack time to do the
calculations prior to the due date. The possible additional income from a few days
additional interest wasn't worth the trouble, as it may not be by chainging your
payment a few days.

It was common practice into the 60s that mortgage interest was charged in advance rather than arrrears. So if someone tells you their mortgage was like that it's possible, depending on when it began. Once originated, the interest charging method would have remained for the term of the loan.

Gfactor
12-07-2005, 12:59 PM
That is completely false. Take a look at your credit reports some time. There is no place for late payments that are paid less than 30 days late.

Right on. It's not that the law prohibits reporting 20-day late payments, it's that the bureaus don't want the information in that format, and they have no way of reporting it. Credit reports typically have three columns: 30 days, 60 days, and 90+ days. So there just isn't anyplace to put a 20-day late payment.

Philster
12-07-2005, 01:15 PM
Definitely won't show on a credit report.

30 is the minimum (basically, you missed a payment in a billing cycle). When the next payment due date comes for the cycle, and they didn't receive the prior payment, this triggers their system to count you as 1 X 30 days late, which is then reported to the credit bureaus.

Emilio Lizardo
12-07-2005, 01:23 PM
I've been mailing my mortgage payments based on the 16th of the month deadline for over 3 years now, with no problems. I just ran one of my free credit reports last week and it shows my mortgage as "status: open/never late." Besides which, the bill itself usually doesn't hit my maibox until about the 26th or 27th, so making a payment by the 1st would be hard.

ethelbert
12-07-2005, 02:06 PM
One caveat here; I have a B of A bank account and a B of A mortgage. When I paid my mortgage, I used the online payment facility (not the account transfer facility). Since it was B of A, I assumed that it was done via electronic funds transfer. Actually, they put the check in the mail! I found this out when it went awry and the mortgage company started dunning me. Naturally it was all sorted out eventually and late charges were waived, but I doubt they would have been as understanding had it been another bank. I now use the account transfer facility.

My point is that you should not assume that a payment made online is electronic funds transfer and not a paper check. If it is a paper check, it may take longer than you expect & you will end up eating the late charge.

astro
12-07-2005, 02:37 PM
It's more than a little harsh, it's totally inappropriate for GQ.

You need to re-read the OP. The

Originally Posted by dolphinboy

You are an idiot... well, that's a little harsh.

response was in response to the question

Or, more to the point, am I an idiot for making my payment on time when I have a week or two more to keep the interest? And is there a risk to my credit rating by paying after the 1st, but before the 15th?

Plynck
12-07-2005, 02:49 PM
My BIL is president of a title services company and during settlements they always make the point to tell you that missing the due date could result in recording a late payment even if it is before the date where a late fee is charged. Notwithstanding dolphinboy's experience, a bank would be well within its rights to report a late payment in those circumstances. I do not know how common it is in the industry to actually report such a payment as late, but I suspect it is uncommon.This was my understanding as well from reading that newspaper article; that the mortgage company or bank may choose not to report it as a late payment, but that they were within their rights to do so. From anecdotal evidence, it appears that mortgage companies are choosing not to report this, which is good news if I ever get a bit forgetful.

It's more than a little harsh, it's totally inappropriate for GQ.Thank you for your support, but I think it was meant as a humorous reply. At least, I took it so. After all, I did start it... :)

Shagnasty
12-07-2005, 03:03 PM
[QUOTE=Plynck]This was my understanding as well from reading that newspaper article; that the mortgage company or bank may choose not to report it as a late payment, but that they were within their rights to do so. From anecdotal evidence, it appears that mortgage companies are choosing not to report this, which is good news if I ever get a bit forgetful.QUOTE]

No, no, and more no. See above. They can't report anything because there is nothing to report. The earliest that ANY bill can be reported as late is at 30 or more days.

Each of the 3 credit agencies generate reports with columns for 30 days late, 60 days late, and more than 90 days late. There are no entries for anything less than 30 days late on anything.

You don't have to depend on the goodwill of the bank. They set up the contract do that you can pay up to 15 days late with no penalty from them. They also can't report anything to the credit agencies that will matter.

flex727
12-08-2005, 01:28 PM
You don't have to depend on the goodwill of the bank. They set up the contract do that you can pay up to 15 days late with no penalty from them. They also can't report anything to the credit agencies that will matter.
Makes sense, but how about the situation where you go back to the same mortgage company for another loan. Might they use the information that you consistently pay 10 days late to consider you less creditworthy than someone who pays on time?

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