Delinquency
Haven’t you ever paid a bill a few days after the due date? It happened to all of us, not necessarily because we didn’t have the money, but because we simply forgot about it. A delay of a few days on a bill is not such a big deal, yet, according to the definition of delinquency, theoretically, you were delinquent on it. For most invoices and bills there is a grace period. During that time, the company or the bank doesn’t initiate any other measures to recover the debt. As long as you pay your bills or make your loan current within that grace period, your debts are not in delinquency. But, if you fail to pay in full the amount due, you may be contacted by a collection agency.
Every borrower should know the definition of delinquency when they are granted any type of loan, but especially when contracting a mortgage. All other debts fade in front of a mortgage. You should do whatever it takes to pay it on time, every month unless you want to lose your property. It is better to postpone the payment of other unsecured debt than to pay your mortgage late. So, delinquency is not necessarily bad as long as you are aware of it and it helps you avoid foreclosure. However, ending up in delinquency too often may affect your credit score.
A home loan is generally delinquent for 270 days, counted from your last payment. So, in about 9 months, the bank may decide to foreclose on your loan if you don’t seek any kind of settlement. Just because your mortgage is delinquent, it doesn’t mean that you will lose your house. Yes, it is very likely for that to happen, but you can stop a foreclosure by making payments of any amount while your loan is delinquent. Be aware that your loan may accrue interest and penalties during this time, though.
However, there is a piece of good news. Loans are not considered delinquent until after 15 days past the due date. Most mortgages have this grace period of 15 calendar days which allows borrowers to pay their debt without incurring other costs. And as long as you pay within the grace period, your credit score is not affected.
Now that you know the definition of delinquency, we hope that everything is clear and you can better manage all your monthly payments.
Popular Real Estate Terms
Factor employed by real estate agents or appraisers to determine the change needed in operating income to obtain a desired rate of return. It is used to evaluate income-producing property. ...
Premiums in insurance and real estate define as a bonus or surplus money. A dividend means a periodic fee you have to pay for your insurance protection. While in real estate, a premium ...
Fibrous, fire-proofing material that was used in buildings and homes for insulation. ...
The external covering finish of a structure which protects it from the elements. Exterior finish materials, including shingles, siding, and paints, are design to resist severe weathering ...
The two terms used to describe professionals in the real estate industry are “realtor” and “real estate agent”. These two terms are used interchangeably or as ...
Gift of real property as stipulated in a will. ...
Tax deduction permitted upon the transfer of property from one spouse to another. The deduction is allowed under the federal gift tax for lifetime transfers or under the federal estate tax ...
Before getting a loan to buy a property, you must know the definition of foreclosure. A foreclosure is the process of making a loan due immediately. Technically, a loan becomes due way ...
Approach to determining a capitalization rate for use in valuating property so as to arrive at a suitable purchase price. To the risk free interest rate is added a risk premium to cover the ...
Have a question or comment?
We're here to help.