Consequences of Foreclosure Part 1
When a person buys a home, the idea that they may one day face foreclosure is probably the furthest thought from their mind. However, life situations can change at the drop of a hat and unfortunately, a person’s financial situation may suffer.
During these trying times, it’s human nature to freeze up and simply let the bank take back your hard-earned home. However, this is the worst thing you can do. Not only will you lose the home you have made months, potentially even years worth of payments on, you will face a variety of other consequences.
If you have found yourself weathering stormy financial waters, don’t wait until things get worse. If you think you will not find a buyer on the traditional market fast enough, there are other ways of selling a home as is in Tampa, FL. The proactive choice of selling fast has helped many people who thought they were out of options.
In Part 1 and Part 2 of this three-part article, we will cover the main financial ramifications of foreclosure: the credit score consequences and the tax consequences. In Part 3, we will discuss the emotional consequences of foreclosure.
Credit Score Consequences
One consequence of foreclosure that you would be suffering through for years is the hit on your credit score. Some people mistakenly think of a foreclosure as a rough hurdle to overcome before continuing on with their life. In reality, foreclosure is more like a rough hurdle followed by an uphill battle.
Once you’ve been foreclosed upon, your credit score will drop and remain bad for a long time. This score decrease can range from approximately 85 to 160 points. The better your score was to begin with, the more it drops as a result of foreclosure.
It usually takes three to seven years and tons of hard work to get your score back up—if you are lucky. Some people never fully recover. Usually, a foreclosure also remains on your credit report for life, even if the score itself eventually goes back up.
Remember that foreclosure is not your only option. At Ethical Home Buyers, we pride ourselves in helping good people who are facing bad financial circumstances.