Late Charge

The penalty a borrower must pay when a payment is made a stated number of days. On a first trust deed or mortgage, this is usually fifteen days.

Late dates are different depending on the lenders. Also, the late charges are different as well. Be sure to review the loan documents or ask the closing agent at the closing.

Each state has a specific law stating exactly how much grace period a consumer has before a late payment can show officially be considered late and show up on their credit report.

Late charges are penalties imposed by banks on mortgagors when payments are paid after the grace period. Most late charges will not negatively impact the mortgagors' credit history unless they are more than 30 days late.

The grace period is stated in Truth In Lending document in the closing document packet. After the grace period is over, the borrower will be liable to pay the late pay penalty as stated in the TIL.

If you make a late mortgage payment and do not include extra for the late fee, your payment may be applied to the accrued late charge first. Then it is applied to past due interest. This will decrease the amount of money that is applied to the principal balance of your loan.

Late charges can eat up your budget right under your nose. It's best to if at all possible avoid even a single late charge.

» DISCLAIMER: The information contained in this article on 'Late Charge' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.