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Utilizing the Grace Period...

Valued Contributor

Utilizing the Grace Period...



I have just entered into a new mortgage.  Like many mortgage payment requirements, my payment is due on the 1st, with a penalty if not paid by the 15th.  I am just curious if it is safe to play the grace period game as long as one absolutely makes sure the payment is in before the 15th.  I know there is no late fee and no reporting to the CB's, however are there any disadvantage to doing this?  Can it hurt any "internal" scoring or impact any refinancing efforts in the future?  


Thanks for any thoughts!  


Year 2012: All Scores in the 520 range, during a foreclosure, CC Settlement and high UTIL. Very ugly days...
April 2023: EX8: 840; EQ8: 832; TU8: 842 -- Middle Mortgage Score: 822
In My Wallet: Discover $73.7K; Cap1 Venture $48.7K; Amex ED $38K; Amex Optima $2.5K; Amex Delta Gold $18K; Citi Costco $22.5K; Cap1 Plat $8.4K; Barclay $7K; Chase Amazon $6K; BoA Plat $21.6K; Citi TY Pref $21K; US Bank $4K; Dell $5K; Care Credit $6.5K. Total Revolving CL: $296K
My UTIL: Less than 1% - Only allow about $10 a month to report, on one account. .
Message 1 of 7
Moderator Emeritus

Re: Utilizing the Grace Period...

Never heard this w/regards to mortgage.  I would suspect playing it out to the final day/days gives likelihood you might truly be late and get penalized.  What difference does 15 days really make?  Hopefully not alot of possibly other issues might exist.  As if mortgage payment is say 2k then you are talking 5-10 in interest earned for a bigger risk.  Just my honest opinion.  Not saying this is you, just would pay by due date for minimum gains

Message 2 of 7
Valued Contributor

Re: Utilizing the Grace Period...

It depends on the terms of the loan.


Most mortgage loans have a monthly calculated interest charge

and it is the same no mater when you pay.

With this type of loan, yes you save by holding onto your money longer,

if in a good HYS, etc.


However some use a simple interest mortgage formula. (daily interest)

This is how most car, & personal loans are calculated.


With this type you benefit by paying as early as you can.

In almost all cases the daily loss on a mortgage loan's interest in more than

what would be earned by keeping the payment for the float.


You need to know what type of mortgage loan you are in.



Message 3 of 7
Established Contributor

Re: Utilizing the Grace Period...

I have never witnessed it have any impact on credit. People.even make their payment on the last day of the month - zero impact to credit - just need to pay the late fee. You're perfectly fine

Message 4 of 7
Moderator Emeritus

Re: Utilizing the Grace Period...

Grace period on a mortgage is just for the fee AFAIK.  I had a third party paying my rental mortgage, and their payment times varied from the 3rd to the 7th and never any issues.


Ultimately you can play with it, not much risk but paying a late fee is never smart financially unless you have to.  Actual credit impact is 31 days after the original due date (which I think is the 1st, not the 15th assuming typical grace periods).


I personally don't see much value in two weeks of interest, but if it helps your cash flow by all means leverage it.

Message 5 of 7
Community Leader
Valued Contributor

Re: Utilizing the Grace Period...

Our mortgage is with SunTrust/Truist and I think there's a late fee after the 8th. 

Message 6 of 7
Valued Member

Re: Utilizing the Grace Period...

It doesn't hurt an internal scoring, but it does mean you pay more interest. I would suggest if possible maybe paying your mortgage payment in half bi weekly. If you want to use the 15th as a payment day, The way I see this is the 15th of January you could pay January payment, then the 30th pay half of February then February 15 pay the reminder. I just wouldn't want you to get in a pattern of paying on the 15th, because you would in the end up paying more interest. And if you cant move to a biweekly payment now maybe when you come across extra income tax refund/bonus etc you set yourself up to be on the biweekly plan You also have to tell the service provider to apply the extra mortgage payments to principal

Remaining Card limit goals:
Capitol One 3,600/2,500/2,300 goal 10k each line or close after buy a home|Discover $9.5k goal 15k | Citibank $6.5k goal 10k | Southwest $8,200 goal 20k |PayPal goal $6.0k goal 10k|Wayfair $2.1k goal $5.0k

Possibly cancelling:
Amex Blue 2k | No credit line increase since inception 2017
Closed accounts
Legacy CC/Capitol One secured 08/2021
Amex 11/2022

Entered the garden on 9/01/2021
Message 7 of 7
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