A foreclosure can affect your credit rating drastically and should only be considered as a form of last resort.
It is rumored that a foreclosure can affect your credit score between 200 and 300 points. That means that if you have an excellent score of 800 it will lower your score to as much as 500 which is considered to be a negative credit score.
Natalia Osorio Editor of the “Loan Modification Foreclosure” website — http://www.LoanModificationForeclosures.com — pointed out;
“It is mandatory that a creditor does not offer you any financing for 24 months following a foreclosure. This limit does not only go towards home financing but any kind of credit. Therefore you will not be able to buy a car, take out college loans, or even finance something as small as a computer. It may also affect your ability to find an apartment as landlords use your credit score as a means to determine how reliable you will be as a tenant. The same can be said about trying to get a phone number or cable as they will also run your credit to determine your reliability…”
The good news is that the harmful effects of a foreclosure can start to be reversed after the 24 month period has elapsed. A foreclosure will not fully be removed from your record until after seven years; however some lenders will offer you financing after two for small loans. You can expect to be able to purchase a home again from some lenders after around five years; however you will most definitely be assessed a very high interest rate. If you do choose to finance a home with a high interest rate you will be able to refinance the home after the foreclosure has dropped off your credit report assuming you have stable payment history.
There are some things you can do to avoid losing your home, or at least lessen the impact on your credit record. If you are interested in keeping your home and you have steady employment but just cannot keep up with the mortgage payments you may be able to refinance your home or do a loan modification.
“…If you are not interested in keeping your home, and you can prove that you cannot keep up with your mortgage payments, you may qualify for a short sale. To explore these options you should contact your mortgage company immediately. Mortgage companies do not want a foreclosure any more than you do and therefore it is in their best interest to try and work out an option to minimize the loss for both parties…” N. Osorio added.
Further information about how to get professional assistance with a mortgage loan modification by http://www.LoanModificationForeclosures.com
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