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?
there are tenents living in the house that he has collected rent from for the past 3 mo. I have the resources to catch up the amount owing to get it out of fore closer but he will not cooperate unless he gets some of the monies that he has into the house thus this far. what if anything can I do to protect not only my moms credit but my interest in the house? PLEASE HELP! Thank You, ARH
Goo day,
I think I will decide to let my property go, /i have been having hard time complying with the payments, here is my question...and the only one on the mortgage and my wife is just showing her name in the public records, in other words she is only owner but not the borrower, will she be affected by a foreclosure??? will this affect her credit score as well?
thank you for ypour assistance.
I think I will decide to let my property go, /i have been having hard time complying with the payments, here is my question...and the only one on the mortgage and my wife is just showing her name in the public records, in other words she is only owner but not the borrower, will she be affected by a foreclosure??? will this affect her credit score as well?
thank you for ypour assistance.
Hi
To arh,
In my opinion, you should first catch up with the mortgage payments in order to save the property from foreclosure. You can then negotiate with your ex in order to come up with a deal. You may pay him a certain amount of money and get the property transferred in your name.
To fjjs,
If your wife's name is not on the mortgage docs, then she won't be affected if the property goes for a foreclosure. Her credit score will not be affected due to this foreclosure. The person whose name is on the mortgage docs will be affected.
To arh,
In my opinion, you should first catch up with the mortgage payments in order to save the property from foreclosure. You can then negotiate with your ex in order to come up with a deal. You may pay him a certain amount of money and get the property transferred in your name.
To fjjs,
If your wife's name is not on the mortgage docs, then she won't be affected if the property goes for a foreclosure. Her credit score will not be affected due to this foreclosure. The person whose name is on the mortgage docs will be affected.
We have a home we can move into, but are upside down about 150,000 in our current home. We want to do a deed in lieu ethically instead of stopping payments. Can they do anything about the other house.... we don't want to just bail, but cannot stay here. We plan to live in the other house for a long time. We were able to put down 25% on that house so the mort. is reasonable.
Hi Guest!
Welcome to forums!
If you go for a deed in lieu of foreclosure, you won't be liable for the deficient amount resulting from the sale of the property. Thus, the lender would not be able to place a lien on your other property.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you go for a deed in lieu of foreclosure, you won't be liable for the deficient amount resulting from the sale of the property. Thus, the lender would not be able to place a lien on your other property.
Feel free to ask if you've further queries.
Sussane
I was the primary on the loan with another person who's been paying the mortgage on a condo. This condo is WAY underwater. This investment (I brought the deal and have put in no money) was to pay for my last year of graduate school. I don't have alot of money in the bank but I inherited my dad's house out of state. I have a renter. This is my only credit blemish. My scores have been in the 800s always. Will my credit be affected the same way considering good scores except for this and am I in jeopardy of losing my Dad's house? I hope to retire there some day. The person paying says this is our best option. Is this true?
Hi Guest!
Welcome to forums!
A foreclosure would badly affect your credit rating and lower it by 250 points. It will also remain on your credit report for the next 7 years. Moreover, you would be responsible for the deficient amount that results from the sale of the property.
It would be better if you could negotiate with your lender for a deed in lieu of foreclosure. Though it will lower your credit score 250 points, you won't be liable for the deficient amount. As a result, the lender will not place a lien on your other property to recover the dues.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
A foreclosure would badly affect your credit rating and lower it by 250 points. It will also remain on your credit report for the next 7 years. Moreover, you would be responsible for the deficient amount that results from the sale of the property.
It would be better if you could negotiate with your lender for a deed in lieu of foreclosure. Though it will lower your credit score 250 points, you won't be liable for the deficient amount. As a result, the lender will not place a lien on your other property to recover the dues.
Feel free to ask if you've further queries.
Sussane
i live iin my parents old house, that they couldn't sell prior to moving into their new house. it's now undergoing foreclosure and we cannot get assistance b/c the house is in my dad's name & it isn't his primary residence...is there anything we can do (maybe a quit claim deed) to transfer the ownership to us & then apply for one of the hud programs to save our house?
If the house is in foreclsosure your parents cannot do a quit claim deed.
Only option is to pay the deficient amount and keepmakign payments on time
Only option is to pay the deficient amount and keepmakign payments on time
Hi Guest!
Welcome to forums!
It would be difficult for you to get any of the HUD programs to save the house. I suppose the mortgage payments for the property are delinquent so the lender is foreclosing the property. If your father transfers the property to you right now, you won't be able to refinance the property unless the mortgage is current. Once you transfer the mortgage as well as the property in your name, then you would be able to take advantage of the HUD programs.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
It would be difficult for you to get any of the HUD programs to save the house. I suppose the mortgage payments for the property are delinquent so the lender is foreclosing the property. If your father transfers the property to you right now, you won't be able to refinance the property unless the mortgage is current. Once you transfer the mortgage as well as the property in your name, then you would be able to take advantage of the HUD programs.
Feel free to ask if you've further queries.
Sussane
I sold my house in June. The new owner has decided to go into the army and wants me to just take my house back. I was carrying the mortgage loan. Will I have to pay to have all of the documents done over again to put the house back into my name? Is there an easier solution?
Hi Ms. Priss!
Welcome to forums!
In order to transfer the property back to your name, you will have re-record all the deeds and required documents. I don't think you've any other way to get the property transferred in your name.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
In order to transfer the property back to your name, you will have re-record all the deeds and required documents. I don't think you've any other way to get the property transferred in your name.
Feel free to ask if you've further queries.
Sussane
Purchasing a new home. Credit around 659. Wondering if my foreclosure procedure will affect my purchase. FP were in late 04 early 05 sold house shortly after. Still on credit!! Will that hurt me? I've heard that they can not use that against you after 2 years. In Ky. Thanks!!
Hi W,
Any negative item will remain in your credit report for nearly 7 years. Thus, the foreclosure is still mentioned in your credit report. Normally, after a foreclosure, you won't be able to get a loan for next 2-3 years. In your case, as 4 years have passed, the foreclosure won't affect your chances of getting a loan. However you would only be able to get a FHA loan as your credit score is 659. In order to get a conventional loan, you should have a credit score of 720-740.
Take care.
Any negative item will remain in your credit report for nearly 7 years. Thus, the foreclosure is still mentioned in your credit report. Normally, after a foreclosure, you won't be able to get a loan for next 2-3 years. In your case, as 4 years have passed, the foreclosure won't affect your chances of getting a loan. However you would only be able to get a FHA loan as your credit score is 659. In order to get a conventional loan, you should have a credit score of 720-740.
Take care.
my dad signed for my home as borrower and i am coborrower but i made all payments until i was recently laid off and my mother got sick and i took care of her until her passing. now i am faced with having to save my home but i can't seem to get any assistance from anyone because he is the borrower of record. can i do a quit claim deed to get the home in my name so that i may qualify for assistance from local agencies?