Question:

Grace Period Definition

Answer:

Grace period for a mortgage is the time during which despite defaults in the payment, no legal steps will be taken against the delinquent payer by the lending or insuring company. The grace period is usually up to three months and can also be referred to as forbearance or cure period.

The grace period should be used by borrowers to at least devise a plan that will help them become current on payments. After the grace period expires, the borrower is expected to start making regular payments (either including the missing payments, or not - as agreed to by the lender). If the borrower defaults again, the lender may initiate foreclosure.

Grace period will often refer to a period you can be late with your mortgage payment without getting it on the credit report. For example, usually if you make a late payment within 15 days of the due date, no one will ever know you missed a payment. If you make a late payment but no later than 30 days of the due date, you will have to pay some late fees but your payment will not be marked as late on your credit report.

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