Posted on: 24th May, 2006 07:15am
When you fail to pay back the mortgage and you're not offered a workout plan to continue payments, chances are that the property may be foreclosed. Foreclosure involves the lender taking away your property and selling it off at an auction in order to recover the unpaid mortgage debt.
However, if the market isn't good enough and the sale price comes out to be lower than the balance you owe, then you may have to pay the deficiency (difference between the sale price and what you owe).
However, if the market isn't good enough and the sale price comes out to be lower than the balance you owe, then you may have to pay the deficiency (difference between the sale price and what you owe).
How does foreclosure affect credit?
When it comes to foreclosure, most people are concerned about how foreclosure affects on credit rating. This is because until and unless one is able to rebuild credit after foreclosure, he will not be able to get credit/loans at better rates of interest. If the financial markets are not good enough, one may not even be approved for any type of credit or mortgage.
Moreover, if your credit isn't good, you won't be able to secure a job in case you're looking for a new one. Therefore, prior to a foreclosure, you should be aware of how foreclosure affects your credit score.
Foreclosure affects your credit score by 250 points. That is, if you have a credit score of 680, it will drop down to 430. So, it's better to avoid a foreclosure and request the lender for a loss mitigation plan so that you're able to keep the home or if at all you can't keep the home, then at least see that your credit doesn't get a big hit.
Moreover, if your credit isn't good, you won't be able to secure a job in case you're looking for a new one. Therefore, prior to a foreclosure, you should be aware of how foreclosure affects your credit score.
Foreclosure affects your credit score by 250 points. That is, if you have a credit score of 680, it will drop down to 430. So, it's better to avoid a foreclosure and request the lender for a loss mitigation plan so that you're able to keep the home or if at all you can't keep the home, then at least see that your credit doesn't get a big hit.
Foreclosure: How long will it affect credit?
Like any other negative item, a foreclosure stays on your credit report for 7 years. However, foreclosure affects your credit score predominantly for the first 2 years. But, once you start rebuilding your credit, it gets better with time, though it'll take almost 2-4 years to get a mortgage after foreclosure, that too at comparatively better rates of interest.
How can you repair credit after foreclosure?
Here are 3 tips to help you repair credit after foreclosure.
- Prepare a budget: Look at the way you spend your money. Plan a budget and try to follow it. Understand why your home was foreclosed. If there's anything that you could have avoided, try to fix it now. Track if you are spending extra and adjust your budget accordingly. Use the Simple Budgeting tool and prepare a well-planned budget.
- Pay your bills on time: Keep paying your bills and debts in time and make sure your creditors report them to the credit bureaus. If required, take help of a credit counselor or avail debt management plan in order to reduce your debt burden. This is because high debt load will affect your credit score and bring it down. Don't ignore small expenses as otherwise they can be sent for collections.
- Get a credit card: You can apply for credit cards and use it to make small purchases. But pay off the balance in full every month. This will reflect that you can manage credit responsibly thereby borrowing only what you can afford and paying it back in time. However, go for a credit card only if you have adjusted your expenses.
If you were quit claimed on to a property and are not on the loan. If the property get foreclosed on will this effect your credit? Will a forecoseure show up on your credit report? And how do you find out if the other person on the title who does carry the loan has missed payments and may be near a default?
Hi Guest!
Welcome to forums!
Quitclaiming the property in your name won't help you in getting any assistance as you would still be listed as a co-borrower of the property. You can ask your dad to apply for a loan modification with the lender. If the lender accepts his request, then, may be, you would receive a low interest rate to make your monthly payments.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Quitclaiming the property in your name won't help you in getting any assistance as you would still be listed as a co-borrower of the property. You can ask your dad to apply for a loan modification with the lender. If the lender accepts his request, then, may be, you would receive a low interest rate to make your monthly payments.
Feel free to ask if you've further queries.
Sussane
Annoymous
You said you are already a co-borrower on the laon and why you are havign difficulty in gettignt he loan modified
Are you saying your name is not on the property
You said you are already a co-borrower on the laon and why you are havign difficulty in gettignt he loan modified
Are you saying your name is not on the property
i had a forclosure back in 2003 how long will stay in my credit. :roll:
Probably 7 years
But you can go for loan probably after 3 years
But you can go for loan probably after 3 years
Hi orli,
It's true that a foreclosure, like any other negative item, would remain on your credit report for 7 years. However, you would be able to get a loan after 3-4 years. You can apply for loans before that but the lender would charge a higher interest rate.
Thanks
It's true that a foreclosure, like any other negative item, would remain on your credit report for 7 years. However, you would be able to get a loan after 3-4 years. You can apply for loans before that but the lender would charge a higher interest rate.
Thanks
If I marry someone who has a foreclosure on their credit, will my credit be affected?
Hi curious,
Your credit will not affected just because your spouse has a foreclosure in his/her credit report.
Your credit will not affected just because your spouse has a foreclosure in his/her credit report.
Will my wife's credit score be affected if our home is foreclosed, or just mine since the loan is only in my name. Her name is only on the title.
Hi Guest,
As your wife's name is not on the mortgage docs, her credit report will not be affected due to the foreclosure of the property. Your credit score would, however, get reduced by 250 points.
Take care
As your wife's name is not on the mortgage docs, her credit report will not be affected due to the foreclosure of the property. Your credit score would, however, get reduced by 250 points.
Take care
I am current on my mortgage but will face an fha foreclosure because the property is not my primary residence. how does that affect my credit?
my husband purchased our home 4 years ago before we were married. Since then he has lost his job and ran a business into the ground loosing everything. Meanwhile, I have been at home with the babies. What am I resposible for? My name is not on the loan but I do live in the hose. We were served with forclosure papers last month and have a court date this comming week. Please help! I cannot trust my husband with anything he says... :cry:
Hi Kristen,
You've mentioned that your name is not on the mortgage document. In that case, the lender will not be able to sue you for the mortgage dues nor will it affect your credit report. However, your husband's credit score will be lowered by 250 points and he would be responsible for paying off the remaining dues.
You've mentioned that your name is not on the mortgage document. In that case, the lender will not be able to sue you for the mortgage dues nor will it affect your credit report. However, your husband's credit score will be lowered by 250 points and he would be responsible for paying off the remaining dues.
I have two properties on my credit report and my credit score is 785. I have not missed a payment on any of my accounts in nine years.. If I foreclosed on one of the properties, will I still take the 250pt hit or will it be less of an affect on my credit score since I have another mortgage...I only have $8000 in total debt that will be paid off by June 2010....
Hi Toby,
If you let one of your properties go into foreclosure, it will effect your property in a negative way and reduce your credit score by 250 points. Moreover, as a negative item, it would remain on your credit report for the next 7 years. Also, you won't be able to qualify for a loan in the next 3-4 years. It will hardly matter whether or not you had a second loan.
Take care.
If you let one of your properties go into foreclosure, it will effect your property in a negative way and reduce your credit score by 250 points. Moreover, as a negative item, it would remain on your credit report for the next 7 years. Also, you won't be able to qualify for a loan in the next 3-4 years. It will hardly matter whether or not you had a second loan.
Take care.