HOMEOWNERS in financial hardship almost never want to give up their homes voluntarily. I don’t blame them, but being honest with yourself and your family is the least you can do.
Most of them will do anything possible to stop foreclosure, even trusting in companies and investors that will only take advantage of them in such desperate situations. But although homeowners know that they do not want to be forced to move out and give up their properties, few of them really understand the long-term effects of foreclosure. Damaged credit is just one of the reasons to avoid foreclosure and find some solution before the lender takes the home through the entire process.
The lender and their attorneys will call several times a day asking for their money. This can be one of the most stressful aspects of the entire foreclosure process, especially when the homeowner is still in the middle of a financial crisis. The homeowner knows that he can’t pay the mortgage, but is afraid to inform the lender, for fear of being put into foreclosure sooner rather than later. The fact that the lender’s collection department calls repeatedly on home phones, cell phones, and even workplaces, generates even more stress, causing homeowners to avoid confronting the problem.
The foreclosure and auction sale will be public record, making everyone who is interested aware of the fact that this particular house is being foreclosed due to nonpayment. Oftentimes, homeowners hear from their friends, family, or neighbors that their house is advertised in the paper. This is their first knowledge of the foreclosure process, if they have not been opening mail from the bank or their attorneys. Finding out from someone in the community that the house is in foreclosure is one of the most embarrassing situations to be in.
The house will sell at an auction for much less than what is owed on the house, putting the homeowners in danger of being sued afterwards for any deficiency judgment. An aspect of the foreclosure process that every homeowner should be aware of and should watch out for, is the possibility of a deficiency judgment. Make sure you are fully confident of letting your property go into foreclosure and learn about what options lenders might take to pursue, especially if you have a second lien on your property.
The foreclosure victims will also lose the house and have to move out before they are evicted by the county sheriffs department. With a foreclosure on their credit, they will have a tough time passing the credit check to rent an apartment, and may have to put down more for a security deposit or pay months in advance. There are ways to get around this, but most former homeowners will find difficulty in finding another place to rent right after the foreclosure has been finalized for several months thereafter.
The foreclosure victims will not be able to buy a new home for at least a few years after losing their property, unless they save up a large down payment, in the range of about 35% of the value of the home they wish to purchase. Obviously, this is improbable for most families struggling to keep on top of all of their other bills, but it is in the interest of every family to have an adequate savings account in case of emergency.
Funds from the emergency account can eventually be transferred to a new account to save up for a downpayment or pay down other bills, as the former homeowners’ financial situation stabilizes and improves. But for the first few years after foreclosure, there will be no chance of qualifying for a new mortgage without a very large downpayment. I just recently ran a credit on a client who just had a foreclosure 2 years ago, their second lender still the full balance and past due amounts on their credit. How do you resolve that? Here they are thinking they might be able to buy a home now.
If they want to re-establish their credit, new loans and credit cards will have much higher interest rates and much lower maximum balances. Many companies will simply refuse to make any loans to the former homeowners, and the companies that specialize in poor credit lending often charge extra fees on top of high interest rates. It is important for foreclosure victims to begin re-establishing good credit habits after losing their homes, though, especially if they wish to become homeowners again in the future. Debit cards and possibly initially paying higher rates might be your best bet to re-establish. You don’t really have much choices, here in the States you can do so much with a decent credit rating. Later on when the market opens up, the sky could be your limit if your credit is good and the good times come back. So, be prepared.
Those are some of the main repercussions homeowners will have to deal with when facing foreclosure, and none of them are really a lot of fun at all. In fact, most of them are quite stressful and will continue to plague the homeowners for years after the original foreclosure. If homeowners can find some way to stop foreclosure besides doing nothing, then they can potentially avoid some, if not all, of these unpleasant aspects of losing a home. Giving up on the house will not prevent any of these stresses of the process, but by fighting back against foreclosure, homeowners can take back control of their financial lives and keep their personal wealth and assets where they belong: in their own families and communities.
I just want to remind everyone again that everywhere you call for help or almost all the lenders website that might be assisting homeowners with their financial hardship. What do you see there all the time flashing at you? “Don’t pay anyone to help you modify and fall into foreclosure scams.” This is still spreading like wildfire and continues to deceive homeowners. Please double check, triple check before you commit, don’t let these scam artists kick you when you are already down and take your money. Remember, a sweet tongue does not lead to a kind heart. There really is no life after foreclosure because you might still have no closures. Please seek alternatives to your foreclosure options. Call me in regards to this very urgent matter happening in your families life.
Thanks for your inquiries and feedback. They encourage me to investigate more and help you in your financial freedom.
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Please send your inquiries, request for help to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Call Ken Go of Innovative Finance Group for future Real Estate needs, Financing, Refinancing, Loan Modification questions or Short Sales. Call Ken at (562) 508-7048.
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