Affects of Foreclosure
If you are behind or are about to get behind on your mortgage payments, don’t wait – call your lender now. By trying to resolve this issue early, you increase the chances of avoiding losing your home through foreclosure and the negative impacts.
Some Possible Impacts of Foreclosure
- Someone who has had a foreclosure will need to rebuild their credit or they will not be able to get credit/loans at good interest rates or may not even be approved for any type of credit.
- Poor credit may even affect your ability to get a job as many employers now check credit on their potential new hires. This is particularly true with many government, law enforcement agencies and military positions.
- If your current employer runs a credit check, it is possible that a foreclosure may put your current job in jeopardy.
- In order to recuperate money they lost when they sold your house in the foreclosure sale, your lender may seek a deficiency judgment against you for the difference between what you owe and what they were able to make when selling your home.
- Foreclosure can affect your credit score by about 200 to 300 points.
- A foreclosure will stay on your credit report for 7 years.
How Long Will a Foreclosure Affect Your Credit?
Repeat - a foreclosure will stay on your credit report for 7 years but it affects your credit score mostly for the first 2 years. As you start rebuilding your credit, it gets better with time. A homeowner's default on their mortgage payments will generally show up on their credit as soon as they are 90 days late (and even 30 days in some states). You will have to report a foreclosure on any future application for a mortgage, which will greatly impact the interest rates you will be offered.
A foreclosure won’t ruin your credit rating forever. It will lower your credit score and remain on your credit report until you’re able to re-establish good credit — which takes time and careful planning.
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