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?
I may have to file bankruptcy due to our business failing. My mothers home is in my name in Massachusetts and I also own my own home in ATL. Can I quit claim my mothers home to my sister so that it will not be affected by my bankruptcy??
Hi Yvonne and Welcome!
You should ask your bankruptcy attorney. This practice maybe construed as deceptive, and may get you in a great deal of trouble. I highly recommend that you DO NOT do this.
Please respond back after you have contacted a Bk attorney.
Thanks
Robert
You should ask your bankruptcy attorney. This practice maybe construed as deceptive, and may get you in a great deal of trouble. I highly recommend that you DO NOT do this.
Please respond back after you have contacted a Bk attorney.
Thanks
Robert
Im getting married next year my fiancee owns a home and so do I. We are both upside down. his more than mine. He wants to walk away from his home, prior to us getting married so we can live in mine. Will I inherit his bad credit due to foreclosure once we are married next year
Hi sheila!
If the mortgage and the property deed is in your fiance's name, then your credit will not be affected in an way. But your fiance can't just leave the house and come to stay with you. He will have to do a short sale or deed in lieu or foreclosure.
Thanks,
Jerry
If the mortgage and the property deed is in your fiance's name, then your credit will not be affected in an way. But your fiance can't just leave the house and come to stay with you. He will have to do a short sale or deed in lieu or foreclosure.
Thanks,
Jerry
Are you able to rent after going to foreclosuer?
Hi sweetp!
Welcome to forums!
If your property has gone for a foreclosure, then you will not be able to rent it. After foreclosure, the rights of the property has gone to the lender and he will sell it.
If you mean to say that whether you will be able to rent a house to live in after foreclosure, then I would say, yes, you can.
Sussane
Welcome to forums!
If your property has gone for a foreclosure, then you will not be able to rent it. After foreclosure, the rights of the property has gone to the lender and he will sell it.
If you mean to say that whether you will be able to rent a house to live in after foreclosure, then I would say, yes, you can.
Sussane
Yes the scores will be affected negatively and will stay on your records for long 7 yrs. The only way to delete it before 7 yrs is, to dispute the same with CRA. In case you are not aware of the process get yourself helped by the repair services.
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my bf is going through a divorce, the Ex let him keep the house. She wants her name off the loan. Refinancing is not an option, the house is worth $120,000 and he already owes $370,000.
He thought about forclosing on the house, but then it affects both of their credit. We want to buy a home together, what options does that leave us?
He thought about forclosing on the house, but then it affects both of their credit. We want to buy a home together, what options does that leave us?
hi dee!
if your name is not on the mortgage or on the title of the property, then a foreclosure will not affect you. refinance was a option but that is not possible as you have mentioned. you can speak to the lender about an alternative payment plan which will be easier for both of your to pay off the debt. if that is not possible, then you can try for a short sale or a deed in lieu of the house.
thanks
if your name is not on the mortgage or on the title of the property, then a foreclosure will not affect you. refinance was a option but that is not possible as you have mentioned. you can speak to the lender about an alternative payment plan which will be easier for both of your to pay off the debt. if that is not possible, then you can try for a short sale or a deed in lieu of the house.
thanks
is forcloser home effect my credit
how long does it take for a quit claim deed to be processed thru the courts.
Hi darlene!
As far as I know, a quitclaim deed can be drafted by an attorney and needs to be signed by the grantor (and in some states, grantee). Then you need to notarize it and record it in the county recorder's office. I haven't heard of quitclaim deed being processed through courts.
Thanks,
Jerry
As far as I know, a quitclaim deed can be drafted by an attorney and needs to be signed by the grantor (and in some states, grantee). Then you need to notarize it and record it in the county recorder's office. I haven't heard of quitclaim deed being processed through courts.
Thanks,
Jerry
I am interested in making a purchase of a house by quick claim deed. Would I be the sole owner? How do you find out if there any loans on the property currently?
Mr White you can visit the local county office to see all the liens or you can hire a title company or attorney to do a title search on the property/owners.
if you do a QCD then you should be able to be the only owner
if you do a QCD then you should be able to be the only owner