The mortgage grace period is the time between when your payment was actually due and when a late fee will be assessed. This normally is 15 days for home loans. So if your mortgage payment is due on the first of the month, then a late fee will be assessed if the lender does not receive payment by the 15th.

Late Fee

This is your standard 15 day mortgage grace period. You are technically late but are not given a late fee. However if you have not given your payment after that point, the late fee will kick in. The grace period allows for some measure of cushion if you forget to send in the payment or something went awry in delivery.

Reporting to Credit Agencies

After 30 days of being late, the lender will report to the credit agencies you were late. This black mark can stay on your record for up to 7 years. It can affect whether you will get another loan and what interest rate you get for future loans. These loans can be car loans, home improvement loans, or other types of loans.

Some lenders will not actually go by 30 days but by the end of the month. So, on months with 31 days you are given more time as opposed to a shorter month such as February. So, it is best to ask your lender questions about your mortgage payment grace period. This information will also be in the documents the lender sent with your loan. So get your reading glass, find a quiet spot, and get familiar with the mortgage grace period to avoid late fees.

Get Confirmation

It is important to have mail confirmation if you go beyond mortgage due date. This will help protect you if your lender decides to report to credit agencies. If you need your payment to arrive quickly, go with overnight shipping with confirmation to avoid a late fee.

The Courtesy Call

Some banks will start to give you "courtesy calls" after you miss the due date. Some will even report you to the credit agencies before 30 days. There have been complaints about the Chase mortgage grace period. It appears they do not like their customers being late and take are very quick to post late fees. Some customers have not even received a late fee letter in the mail.

Communicate with your Lender

If you find yourself in a situation where you may be not make your due date, give the lender a call to let them know you will be late. Call the collections department, if possible, to permit them to put a hold on your account. Some lenders have a recording to permit you do this without contacting a live person.

Checking on Auto-Pay

One other note is you might not think you have to worry because you have auto-pay set up. Sometimes the auto-pay is not set up properly initially and you will have to verify the first couple of months that the payments were actually sent on time. I was a customer service operator for a number of years and I can't tell you how many people complained that they set their mortgage on auto-pay and the system did not sent out a payment. There were mortgage late fees then posted and a very angry customer to deal with. Some lenders will be understanding and some will not.

Simple Interest Loan Trap

One item of interest is that the mortgage grace period on simple-interest loan does not exist. So if you are beyond the due date on that type of loan, the interest will continue to build and you will pay extra compared to a standard mortgage loan. With a simple interest loan, the interest is calculated and accrued daily. So the sooner you pay the mortgage the better. The reverse is true. The later you pay, the more the interest will accrue and you will get hit with a late fee! If you need to understand your simple interest loan more there are late fee calculators available for this type of loan. I personally would avoid a simple-interest loan just because it doesn't have a grace period. A home loan grace period is an important cushion to have, especially in this economy.

Conclusion

So to recap, the period of grace is normally 15 days from due date on a mortgage and the grace period will usually allow for 30 days before reporting to credit agencies. After 30 days the mortgage loan is considered to be in default. After 90 days of this, the lender can begin the foreclosure process. 

The loan grace period is something you should be very clear with your lender on. There should be no surprises with regards to your payment grace period. The mortgage grace period should be used as a cushion and not something to take advantage of.