What Happens if You Don’t Pay Your Mortgage

Posted by Hannah Lapin on Aug 31, 2018 9:00:00 AM

hand holding money in front of a house that is half-photo and half-drawn

When you take out a mortgage loan, not only is your lender expecting to receive their monthly payments on time every month, but also you are legally obligated to pay. Besides having a tremendous impact on your credit score, if you don’t pay your mortgage on time, there are other serious consequences. Here is a breakdown of what happens initially and how that can escalate into foreclosure:

Late Fees:

  • Initially, if you miss a mortgage payment, you will often be subject to late fees. Who wants to pay extra on top of their interest?

Default Interest: 

  • In addition to late fees, you may also incur default interest, which typically accrues at a rate higher than your normal interest.


  • If you default on your mortgage, you are not meeting the terms of the loan agreement. While technically this happens at the time of your first missed mortgage payment, lenders will file a Notice of Default and then make the borrower aware of the notice. A Notice of Default is considered the first legal step toward foreclosures.


  • If you don't remedy the situation within a period of time, the lender has the option to start the foreclosure process. At the conclusion of that process, the lender takes possession of your property and sells it to gain back some of their losses. In addition to losing the property, foreclosures can damage your credit for long periods of time and also result in negative tax consequences. In other words, foreclosures should be avoided at almost all cost. 

Keep in mind, the foreclosure process varies by state, so contact an attorney to find out about your state laws. If you are struggling financially, talk to your lender BEFORE you miss your first payment. Lenders may work with their borrowers on payment plans,  and being proactive is always the best policy.

Better yet, stay on top of your mortgage payments by maximizing your monthly cash flow. For ways to maximize your monthly cash flow and make the most profits out of your rental property, see our blog category "Maximizing Rental Profits." For creative ways to earn extra income, see our blog category, "Make Easy Money."

More Resources

Related: Credit Score Guide for Real Estate Investors, Landlords: Take Advantage of Tax Breaks to Maximize Profits 

Topics: Real Estate Investing

Most Popular

Disclaimers: Please note that our blog contains affiliate links, and at no additional cost to you, Visio Lending will earn a commission if you decide to make a purchase after clicking through the link. As an Amazon Associate, I earn from qualifying purchases. Please understand that we have experience with all of the companies we recommend, and choose to refer our borrowers and partners because they are helpful and useful, not because of the small commissions we make. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.


The information in this blog has been prepared solely for informational purposes. The contents are based upon or derived form information generally believed to be reliable although Visio accepts no liability with regard to the user's reliance on it. For legal advice, please contact your counsel.