by jennkhart@gmail.com on December 15, 2010
Here is what you risk to lose if you let your house go to foreclosure:
Because of the incredible amount of stress of owning a home worth less than what you owe and the challenges of making a monthly mortgage payment, many home owners simply decide to walk away from their homes and let them revert back to the bank.
This option seems to be the easiest on the surface because you can mentally move on with your life. Even though this seems to be the easiest way out, it’s probably the most damaging decision you can make with numerous short-term and long-term ramifications.
Here are a few short-term ramifications of walking away from your home:
- You are still responsible if someone gets hurt on your property.
- You are still responsible if the house burns to the ground.
- You are still 100% responsible for anything and everything that happens until the sheriff’s sale.
Bad things happen in vacant homes, and you’ll be on the hook. Some banks will let your home sit in foreclosure for long periods of time to keep the liability on your shoulders instead of theirs. There’s no telling what can happen to your home while it sits vacant.
by jennkhart@gmail.com on December 3, 2010
How important is it to avoid foreclosure? Well, assuming nothing bad happens to your home while it’s vacant during the foreclosure process, you have to consider the long-term impact of foreclosure:
- You’ll be forced to disclose your foreclosure on any future mortgage application. This will make it very difficult to buy another home in the near future. The foreclosure homeowner loses the ability to purchase a Fannie Mae loan for 5 years for primary and 7 years for non primary residence.
- Your credit score will drop by 300 or more points, which will make almost everything more expensive for you. Your car insurance rates will go up dramatically. Your credit card rates will go up dramatically. You’ll even have trouble renting an apartment because most landlords perform credit checks. Not to mention the fact that all credit cards or available lines of credit will more than likely be closed.
- You may have trouble securing new employment or keeping old employment. Most employers today routinely perform credit checks on new employees. A foreclosure on your credit score could cost you a new job or a loss of your current job.
- A foreclosure with a 2nd lien that is a re-course loan can place a judgment against you for the entire amount of the lien.
- Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanour or felony. It’s is a public record and shows lack of financial discipline.
As you can see, walking away from your home and not avoiding foreclosure is a very BIG mistake with significant short-term and long-term repercussions.
Your obvious solution is to stop foreclosure, sooner rather than later, and with the right expert. That means quickly identifying the best option for you (the right action for your brother’s situation may not work for you) and executing the right sequence of actions for maximum results.