Grace period when missing a mortgage payment?

Question

I am refinancing my mortgage and we are going to close sometime next week.  My lender said I shouldn't make my payment on my old mortgage for February because they will pay them off.  They also said that there is a 15 day grace period before the loan servicer reports a delinquency, so I should be okay if anything goes wrong with the loan as long as I pay my February payment by 2/15.  Anyone know if this 15 day grace period is accurate?

David Beard · Answer

It typically takes a 30-day late to actually get reported to the credit bureau.  The 15 days is what triggers a late fee.

Jon Holdman · Answer

That's standard, but look at your loan documents.  They should say.

Sean Brennan · Answer

Thanks everyone for your responses!  Yes, I am just going to make the payment :)

Sandy Blanton · Answer

David Beard is right. There is no credit bureau report unless the payment isn't posted until the following month (IE: ensure it's posted by the last biz day of the month).  There is zero reason to put yourself through the stress, make the payment.  Interest is billed per diem, not monthly.

Jon Holdman · Answer

No.  This is typically covered in the promissory note which is typically not recorded.

Steve Babiak · Answer

IIRC, when I did a refi, the next month no payment was due on the new loan.  When you make the payment now,  you'll lower the eventual payment amount anyway.  So I don't think you'll be "strapped for money" by making the last payment on time.

Daniel Berman · Answer

Sean, the chances of any negative fall-out from following the standard procedure when a property is in escrow are virtually nil.

That being said, if it makes you feel better to make the payment anyway, the possible hassle in getting any overpayment back from the lender will be worth it for you.

Dan

*Disclaimer: Not to be construed as legal advice. For legal advice, please consult with a licensed attorney.

Sean Brennan · Answer

I think Ill just make the payment... Too paranoid about my credit and I want this loan to go through

Pat L. · Answer

We had an investor friend who was advised to do the same, just roll them into the new mtg, but he missed a couple by the time it was ready to close.
When the new lender discovered the agreed upon 'missed payments' they pulled out at the last minute, citing the arrears.
I would definitely get agreement on the strategy from the new lender to ensure it is not an issue.

Sean Brennan · Answer

Thanks for the suggestion.  Do you think it says it somewhere on the mortgage that is recorded at the registry?

Grace period when missing a mortgage payment?

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