The Consequences Of Foreclosure

In the world of finances, many individuals may do their best to avoid being associated with the dreaded F word; foreclosure

. To many, it may signify their personal downfall and inability to manage their own finances up to the point of having their properties foreclosed by banking institutions. Generally, to have your home foreclosed means having the bank or mortgage provider bar you from redeeming your mortgaged home by terminating all your rights as a home owner. By doing so, your home may then become the property of your mortgage provider. Normally banks or lending institutions would prefer not to foreclose a property as they are generally more interested in getting their money back rather than obtaining a home. The high costs of foreclosing may also be why even banks and lending institutions avoid having to foreclose a home.

Generally foreclosures happen when you continuously fail to make due payments and as a result, you probably can no longer afford to pay the balance of the amount owed to your creditor. Sometimes default in payments happen by no fault of the debtor as they happen due to unemployment, medical challenges, loan terms and even death. Foreclosure is applied by repossession of your home by your bank or mortgage provider and soon the selling of your home. This usually comes after a Notice of Default has been issued by your lender. If you continuously neglect to pay your lender all due payments, you may be basically terminating all your rights in your home and your lender may exercise their rights to sell your home and evict you from the premises.

Having your home foreclosed carries in itself many consequences that you probably have never thought of. Of course, one of the obviously glaring consequences is the issue of finding a new place to live. Having your home foreclosed usually means that you may have to immediately vacate the premises to allow the bank to follow through with organizing a foreclosure sale in order to try to regain as much as they can from the balance owed. Generally, if you default on the payments of your home it probably also means that you barely have enough cash to live on let alone to pay the deposits of renting a new place. Some owners may just refer to your credit score to evaluate whether to accept you as a tenant but there are some that look beyond your score and straight to the full extent of your credit report. This is where your foreclosed home record may appear and spook potential landlords from accepting you as tenant.

Sometimes the reason of foreclosure might unemployment. Perhaps you previously had a steady job but somehow your employer had to let you go because they had to downsize the establishment. As a result, you could not afford to pay for your home mortgage and ended up having your home foreclosed. Generally history of foreclosures should not matter to employers if you are being interviewed for a new job. However, it may be a matter of concern if you are being interviewed for a position in the financial department of an organization.

After having your home foreclosed, you might find it difficult to buy yourself a new home. Of course generally you may have to wait for a few years before even qualifying for a mortgage loan to buy a new home. However, you may have the option of applying for a mortgage with a federally insured FHA loan. Even then you may still have to wait for at least three years before applying whether or not there are extenuating circumstances such as job loss or medical conditions.

Foreclosed homes may be on the rise so the stigma of the dreaded F word may not be as bad now as it probably was years ago. But the consequences may still affect not only you but your entire family as well. This is why you may want to do all you can to avoid forcing your bank or mortgage provider to foreclose your home because you could not make due payments.

by: Ask Bill

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