It’s natural for your first reaction to the threat of foreclosure to be one of denial or avoidance. Early in the foreclosure process, it’s easy to get stuck in the denial stage, telling ourselves, “I can’t believe this is happening to me!” Sometimes, it seems that the easiest and least painful way to deal with the situation is to just do nothing.
Some homeowners are tempted to just “walk away” from their mortgage when they can no longer make timely payments. If you’re thinking of walking away, there a few things you should know before you make that decision. A foreclosure dramatically affects your credit score. Your credit score will take a drop of 85 points to 160 points after a foreclosure (some sources say even more). This may affect your ability to buy another home for years to come. A foreclosure remains on your credit report for up to seven years. Your credit scores can also affect other areas of your life, such as your insurance rates, phone credit and, in some limited cases, your ability to get a job.
OPTIONS AVAILABLE TO YOU
There are various alternatives to foreclosure that you may be able to pursue, including loan modification, deed in lieu of foreclosure, or short sale. We will examine each of these in depth in subsequent chapters. You could be able to negotiate your way out of a foreclosure. Contact your lender as soon as you realize that you’re having
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