How to Never Miss a Mortgage Payment

Reviewed: February 20, 2014
By FinanceWeb

When you purchase a home, your mortgage payment may feel like a hundred-pound brick resting on your shoulders. The stress and fear of missing a payment or even being late can keep you up at night. Luckily, there are several strategies you can employ to make sure that a late or missed payment never happens to you.

Why On-Time Payments Matter

A late payment on your mortgage can make your credit score take a nosedive. While your credit score may not seem important, a lower score can cost you a ton of money when you want to purchase a car or take out a line of credit. Additionally, getting behind on your mortgage can make a mess of your budget. Trying to come up with two full payments in one month to catch up can be next to impossible. Your lender can also tack on late fees and penalties that drive up what you currently owe. For these reasons, a late or missing payment can be a nightmare.

Pay It Early

Many people get paid every two weeks. If your mortgage is due on the first of the month, make your payment from the second paycheck in the previous month so it is early by a few weeks. This will save you interest over the life of your loan and will give you a buffer if you fall behind. Train yourself to always pay your mortgage out of the second paycheck you receive and you will never be late.

Use a Sweep Account

If you cannot make your mortgage payment from one paycheck, split the amount owed into installments and sweep it into a savings account or a secondary checking account to accumulate. For example, if your mortgage payment is $400 a month and you are paid every two weeks, sweep $200 out of each paycheck immediately. When it’s time to pay your mortgage, the money will have already been set aside. Many financial institutions can help you automate the sweeping process and remove a line item from your to-do list.

Take Advantage of Autopay

Automatic payments can work in either ‘direction’ from your checking account. Most mortgage companies offer automatic payment arrangements in which you authorize them to dip into your account on a specified day and withdraw the amount of your mortgage payment. If this does not appeal to you, you also have the option of sending the money out of your checking account using automatic bill pay. Whether you send the money out or have it removed by your mortgage company, your only real concern is that the money is available. If you use a sweep method or are paying early each month, this shouldn’t be a problem.

Use a Savings Backup

While the strategies listed above can help you avoid a late or missed payment, you may feel even better if you have several mortgage payments held in reserve. To do this, you can set aside a tax return, automatically save a small portion of each paycheck or even save money you earn from a side job. Earmark an account specifically for your reserved mortgage payments and do not use it for any other purpose.

Avoiding late and missed mortgage payments can be simple if you take advantage of automatic bill pay or auto billing from the mortgage company and consider paying early. Savvy savings habits will ensure you are able to meet your financial obligations now and in the future.