In a dire financial situation, it may seem like the best option to walk away from your home if the foreclosure process has begun. But before you make a decision, you need to understand the true consequences of foreclosure.
A foreclosure on your credit report can drop your credit rating by as much as 200 to 300 points in some cases. A fabulous credit rating of 760, dropped to 560 or below, makes buying a home, leasing a vehicle, or even getting certain jobs a challenge. A foreclosure generally stays on your credit report for as long as seven years. Rather than taking such a significant blow to your credit score, take the time to speak with a financial counselor or foreclosure attorney.
Many people don't realize that they may still owe a balance after their home is foreclosed on. If the bank or mortgage company sells your home for less than its value, you will owe the balance between the sale price and the price listed in your mortgage agreement. This is referred to as a deficiency balance. This type of situation is a nightmare when you're already having financial issues. Many people consider a short sale, which is voluntary (rather than a forced) public auction.
Aside from the financial issues associated with a foreclosure, stress can play a big role in your life during the foreclosure process. Waiting to be required to leave your home, worrying about the emotional impact on your family, and wondering how you'll be able to purchase another home are common concerns. A foreclosure attorney can help alleviate the burden of stress by explaining your options in detail. For some people a mortgage release is the best answer, which transfers the title back to the owner of the mortgage.
If you've been in your home for a short amount of time, you are still losing equity when you face a foreclosure. Any money that you put down on your home and any of the principal balance that you've paid will be lost equity. If you've lived in your home for many years, you stand to face an even greater loss of equity, which can be financially devastating if you've sunk a great deal of your assets into your home.
When faced with a foreclosure, most people feel extremely overwhelmed and don't think they have any legal options or outs. This isn't the case. When faced with financial hardship, the mortgage company will often work with you to find a suitable solution. Foreclosing on your home isn't good for you or the mortgage company. For more information, contact a company like Liviakis Law Firm.Share