How Do Late Payments Impact Mortgage Approval?
Late payments can impact your chances of getting approved for a mortgage. The degree to which your chances are affected will depend upon a number of factors.
Many mortgage lenders have specific criteria they look for when assessing a mortgage application. Failing to satisfy these criteria can result in instant disqualification, even if in all other ways your application is good.
Type of Account
The type of loan your late payment relates to will also be a factor in the lender’s decision. A late payment on something like a utility bill will often be ignored and put down to a simple mistake. This is because it’s quite common for people to fail to change their addresses when moving, but this isn’t necessarily seen as reflective of the applicant’s affordability.
On the other hand, a late payment on a secured loan like a previous mortgage will be seen as a more serious incident and will certainly give many lenders cause for concern.
Number & Recency
The higher the amount of late payments on your credit report, the lower your score will be. If these marks are close together and recent, the lender is going to start seriously questioning your ability to manage money and handle an additional toll on your finances. Some lenders will require a clean credit report for at least a year to consider you; others may be happy as long as you are paid up and no longer in arrears.