What Happens If I Stop Paying My Mortgage?

What happens if I stop paying my mortgage? It’s a scenario no homeowner wants to face, but unexpected financial hardship can make it a reality. Stopping mortgage payments means failing to pay your lender the required monthly amount. This can trigger late fees, credit damage, and eventually foreclosure if unresolved. Whether you own a craftsman home in Portland, OR, or a high-rise condo in Miami, FL, knowing what happens if you stop paying your mortgage can help you plan your next steps and protect your finances..

What happens if I stop paying my mortgage? 

If you stop paying your mortgage, the consequences can build quickly – starting with late fees and credit score damage and potentially ending in foreclosure. In the short term, you’ll face financial penalties and a drop in your credit. But if the missed payments continue, your lender can begin legal proceedings to take back your home through foreclosure.

Here’s how it typically starts: Most mortgage payments are due on the first of the month, and lenders usually offer a 15-day grace period. After that, you’ll likely be charged a late fee and receive notices from your lender. At 30 days past due, the missed payment is reported to the credit bureaus, which can significantly lower your credit score. Interest continues to accrue, adding to your balance and making it harder to catch up. 

If payments remain unpaid, your loan can eventually go into default, and the foreclosure process may begin.

How missed payments impact your credit score

Your credit score is particularly sensitive to missed mortgage payments. Once your account is reported as 30 days late, your credit score can drop significantly. If you fall 60, 90, or 120 days behind, your credit will take progressively bigger hits. This damage can remain on your credit report for up to seven years, affecting your ability to secure future loans, credit cards, or rental agreements.

The foreclosure timeline: what happens if you don’t pay your mortgage

If you continue to miss payments, your loan will eventually go into default, and the foreclosure process will begin. The timeline varies by state, but generally:

• 30-90 days late: Multiple notices from your lender urging payment and offering potential workout options.
• 90+ days late: The lender may file a Notice of Default or Lis Pendens with your county.
• 120-180 days late: Foreclosure proceedings formally begin.
• 180+ days late: The lender may schedule an auction or sheriff’s sale. If unsold, the property becomes bank-owned (REO), and eviction proceedings may follow.

Foreclosure laws vary significantly by state. Some states allow judicial foreclosure requiring court approval, while others permit non-judicial foreclosure, which can move much faster.

What is foreclosure and how does it work?

Foreclosure is the legal process that allows your lender to reclaim your home after you default on your mortgage. Beyond losing your home, some states allow lenders to pursue a deficiency judgment, where you may still owe money if the sale of your home doesn’t fully cover the loan balance. In judicial foreclosure states, the lender must go through court proceedings, which can take months or years. In nonjudicial states, the process moves more quickly and doesn’t require court approval.

If you’re asking what happens if you stop paying your mortgage, one proactive solution is to sell the home before defaulting. Listing the property while you’re still current, or only slightly behind, can help you avoid foreclosure entirely. If your home’s market value exceeds the loan balance, selling may allow you to pay off the mortgage, avoid credit damage, and walk away with equity.

Legal options to avoid foreclosure if you stop paying your mortgage

If you’re struggling to make payments, it’s crucial to act quickly. Options may include:

• Forbearance: Temporarily suspends or reduces payments during short-term hardship. Missed amounts are usually added to the loan balance.
• Loan modification: Adjusts loan terms—such as interest rate, length of loan, or payment amount—to make payments more manageable.
• Repayment plan: Allows you to catch up by spreading missed payments over a set period.
• Short sale: Sells the home for less than the loan balance, with lender approval.
• Deed-in-lieu of foreclosure: Voluntarily transfers ownership back to the lender, often forgiving some or all remaining debt. 
• Strategic default: Choosing to stop payments even if you can afford them. This option may be legal in some states but comes with major credit and legal risks.

Strategic default: risks and legal considerations

Strategic default refers to the decision to stop paying your mortgage even when you have the financial means to continue. While this may seem like a viable exit strategy in an underwater mortgage situation, it comes with serious legal and financial consequences. Depending on your state, you could face deficiency judgments, credit damage, and even lawsuits. Before considering this route, it’s essential to consult with a real estate attorney to understand what happens if you stop paying your mortgage intentionally.

Steps to take if you stop paying your mortgage

If you anticipate difficulty making payments and are worried about what happens if you stop paying your mortgage, take these steps to protect your credit and your home.

1. Contact your lender immediately. Early communication may help you qualify for workout programs.
2. Seek housing counseling. HUD-approved counselors can guide you through options at no cost.
3. Review your budget and calculate mortgage affordability. Using tools like Redfin’s mortgage calculator can help you understand payment scenarios and evaluate possible adjustments.
4. Build a sustainable budget. Track your income, expenses, and debt obligations to identify areas where you can cut back. Financial counseling services can provide support in creating a budget that helps you stay on track with your mortgage and other essential payments.
5. Consult legal or financial advisors to better understand state laws and long-term consequences.
6. Refinancing. If you still have decent credit and income, refinancing into a more affordable loan, or into a co-borrower’s name, can be a strategic way to exit your current mortgage and avoid default.

Financial counseling services can also help you understand and navigate loss mitigation options, such as loan modifications, forbearance, and repayment plans. These counselors offer independent advice and can help you choose the most sustainable path forward. They’ll guide you through the process of communicating with your loan servicer, assist with required documentation, and ensure you meet important deadlines. A financial counselor can also help you manage other debts, like credit cards or car loans, that may be affecting your ability to make mortgage payments.

Managing a joint mortgage during separation or divorce

If you’re going through a separation or divorce, a shared mortgage can complicate matters. Both parties remain legally responsible for the loan unless the mortgage is refinanced, the home is sold, or one party is formally removed through a loan assumption.

Options for handling a joint mortgage:

• Refinance in one name: If one person wants to keep the home, they may refinance the mortgage in their name only, assuming they qualify on their own.

• Sell the home: Selling and splitting the proceeds is often the simplest solution.

• Loan assumption: Some lenders allow one party to assume the mortgage, removing the other from liability.

• Buyout agreement: One spouse pays the other for their share of the home’s equity.

A real estate attorney or divorce financial advisor can help determine the best strategy based on your state’s laws, your finances, and what happens if you stop paying your mortgage during separation.

Frequently asked questions 

How many mortgage payments can you miss before foreclosure?

Most lenders begin foreclosure after 120 days of missed payments, but notices and penalties start much earlier—usually 15 to 30 days past due.

Can I walk away from my mortgage?

Walking away is known as strategic default. It damages your credit and can lead to foreclosure and legal action, including deficiency judgments in some states.

Does missing a mortgage payment hurt your credit?

Yes. Even one missed payment can lower your credit score, especially if it’s reported 30+ days late.