Question:

What is a grace period for a mortgage loan and how long is it?

Answer:

Most people know what a grace period is, having to deal with credit cards every day. Homeowners also have to know what a mortgage grace period is.

However, while the grace period on credit cards means the period granted by the credit card company without incurring interest on the money spent, mortgage loan grace period is the time after the date a monthly mortgage payment is due when the borrower can still post the payment and not be charged late fees, late interest, and their credit unaffected.

How long is the mortgage grace period?

Usually, the mortgage grace period is 15 days long. For example, if your payment is due on the 1st day of the month, no late fees and interest will be charged until the 16th. Make sure your payment always arrives on time to be posted before the 16th.

If you are using a third-party company to make your mortgage monthly payment, it is still your responsibility to make sure the payments are made on time within the grace period. If, by any chance, the payments are not made on time, you will be charged a late fee and, possibly, will have to post another mortgage payment even though you already made one.

After the grace period expires, 16 to 30 days after the monthly payment was due late fees and interest will be due on most mortgages. However, your payment is reported late after 30 days after the payment due date.

Warning: Even though most mortgages have a grace period that works just as described, there is a type of mortgages - simple interest mortgage (SIM) - which could greatly affect the borrower if payment was made after the due date and even if within the grace period. Since interest is charged on a daily basis, a SIM payment 5 days into the grace period demands a full mortgage payment plus the interest for 5 days.

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