subject: Consequences of Foreclosure in California [print this page] Consequences of Foreclosure in California
The consequences of foreclosure in California go beyond dollars and cents. Many California property owners fell behind in their mortgage loan payments due to the economic system and/or because affordability concerns had been ignored by lenders and buyers. Unable to find the help they needed to prevent or stop foreclosure, many are now facing the consequences of foreclosure in California.
Consequences of foreclosure #1 - no roof over your head
First, they must live with the loss of their residence. A recent report by First Focus, a Washington, D.C. advocacy group, finds that about 2 million children are likely to be affected by foreclosure in some way, such as the need to change schools.
Fortunately, the negative stigma of foreclosure is not what it was. Many good and reasonable people are finding themselves dealing with foreclosure. Unfortunately, it's now considered normal.
With foreclosures so much in the news, it might prompt individuals not to make sound judgments.
They must also find another place to stay. Even though renting is generally considerably more affordable than owning, this comes at a time when they lack the funds for a deposit and first month's lease. Property owners dealing with foreclosure will need to retain some cash to keep a roof over their heads after foreclosure.
Consequences of foreclosure #2 - bad credit and high interest charges
Foreclosure will affect their interest costs on credit cards, auto loans, etc. Foreclosure has an effect on credit scores. "Credit cards have a 'default' rate, and (foreclosed owners) could see their interest rate jump to as much as 30 %," states John Ulzheimer, president of consumer education for Credit.com.
If a foreclosure is an isolated event on an otherwise good credit record, consumers may be able to rehabilitate their records and garner better loans and card rates in 24 months, Ulzheimer says.
Consequences of foreclosure #3 - not being able to purchase a property
The consequence of Foreclosure consists of hampering the capability to purchase an additional house.
Fannie Mae increased the length of time it takes from the completion of a foreclosure sale until finally the borrower can get a new home loan from 4 years to 5 years. The extra year is developed to deter what Fannie Mae might think are borrowers who have created reckless debt decisions. In contrast, distressed house owner who sold their home using a "short sale" is only needed to wait two years.
Consequences of foreclosure #4 - poor job prospects
Another consequence of foreclosure may be an impaired capability to get a new job, particularly if it is in the financial sector or includes the handling of money. To be considered for some jobs, a foreclosed owner may will need to be prepared to answer issues concerning their money-management skills.
Consequences of foreclosure #5 - unforeseen taxes
In some situations, the foreclosed owner may need to be concerned with owing taxes right after losing his/her property. Although most homeowners are eligible for tax exemption, taxes could be owed especially if the house is non-owner occupied and the owner took out money when re-financing the property or on a home equity line of credit (HELOC).
The main lesson to be learned from this is that distressed home owners can stay away from these negative effects if they get help from a capable foreclosure avoidance company. For example, one thing you can do is sell the residence in a short sale. The negative impact on credit score and taxes can be avoided. A new property can be purchased in as little as two years or when you are ready.
With the very low costs that are presently available in this economy, it makes sense to pursue this choice and prevent the negative consequences of foreclosure in California. If you do this, you will likely find that you are much better off in contrast to your other alternatives.
Visit my website to provide you more information and free referral services for distressed homeowners.
