Negatives of Foreclosure
For most people facing foreclosure, the fear and anxiety of the uncertainty surrounding the process is emotionally draining. They worry about the negative impact a foreclosure will have on their credit history and, ultimately, their borrowing power. Understanding the foreclosure procedure can help you to get through the negative results and help you to get on with your life.
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The Emotional Side of Foreclosure
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The thought of losing the house you have worked hard to acquire is an emotionally draining experience for a homeowner facing foreclosure. Many people struggle for months or years to keep up with their mortgage, paying high late fees, only to come to the realization that they are hopelessly underwater. In the meantime, unscrupulous investors and companies tend to prey on people who are struggling, often offering false hope, which just aggravates the situation.
Dealing With Harassment and Intimidation
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When the harassing phone calls start, it is easy to stick your head in the sand, hoping the problem will go away. Be careful what you say to the lender, its attorneys or collectors. Consult an attorney to gain a better understanding of your situation. If you are financially incapable of meeting your loan commitment, and there is little chance that the situation will change soon, begin conserving money and commit to the foreclosure.
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What Does a Foreclosure Do to Your Credit?
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There is no doubt that a foreclosure affects your credit. Typically, a foreclosure will reduce your credit score by up to 140 points. Do what you can to remain current on other payments to lessen other hits to your credit. The worst thing you can do is to continue struggling to make the mortgage payment while missing other obligations. If the bank will allow you to do a short sale, the impact on your credit may be much less than it would from a foreclosure.
How Soon Will You Be Able to Buy Another House?
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How long before you will be considered for another mortgage will depend on how you handle other credit issues in the interim and the circumstances that lead to your foreclosure. Generally speaking, people who defaulted on their mortgage due to an economic hardship, such as the loss of a job or divorce, may be considered again within two to five years. For someone who simply walked away from her mortgage, that period could be doubled.
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