Home foreclosure is a hard thing for a homeowner to experience, not only does it mean the loss of your home, but it can also damage your credit score, making it difficult to purchase another home in the future. Unfortunately, the impact of a home foreclosure can sometimes last up to seven years.
The legal team at Handin Law can help you understand how home foreclosure impacts your credit and help you understand what foreclosure is and the options you have.
What Is Home Foreclosure?
A foreclosure happens if a homeowner can’t keep up with mortgage payments. This gives the lender – usually a bank – legal rights to take back the property to recover the money that is owed. Missed payments can happen during unforeseen circumstances, such as job loss or medical debt. Foreclosure often happens after missing, on average, four consecutive payments, resulting in 120 days of delinquency.
Typically, the foreclosure process involves a court filing by the lender. The amount of time between filing and the actual foreclosure depends on the local laws, as well as which type of foreclosure applies to the situation:
- Judicial foreclosure: This is when the lender initiates the foreclosure by filing a claim after the third missed payment, and the homeowner receives a letter indicating of foreclosure if the payments aren’t made within 30 days.
- Power of sale (nonjudicial): This is when a lender conducts an auction to sell a foreclosed home.
- Strict foreclosure: This is when the lender files a suit against the at-fault borrower. However, this is only allowed in Connecticut and Vermont.
Can Future Lenders See A Prior Home Foreclosure?
Lenders see a foreclosure as one of the most serious events that can happen, next to bankruptcy. The hard truth is that some mortgage lenders will not work with potential borrowers with a foreclosure on their credit reports. However, some may be able to work with a borrower applying for a mortgage a few years after the foreclosure, should borrowers meet all other necessary criteria for a loan.
Can A Home Foreclosure Be Removed From My Credit Report?
Unfortunately, home foreclosures can’t be removed from credit reports before expiration. Should it remain past that time, or if you made the necessary payments before it could happen, then you are able to use a credit report dispute process to have your credit report corrected.
Tips To Improve Credit After Home Foreclosure
A home foreclosure is a challenging event, but it’s not the end of the world. It can often take some time, but rebuilding your credit after a foreclosure is possible. Here are a few tips to get started:
Make Sure Your Bills Are Paid On Time
This is one of the simplest ways to build positive credit. Write the due dates down in your calendar, on a sticky note on your desk, or wherever you will see it.
Keep Your Credit Card Balance Low
Credit cards are only good when payments are made regularly every month. There is no benefit to carrying a balance from month to month. Paying it off in full every month is a great way to not only build credit, but also cut down on interest charges.
Have An Emergency Fund
An emergency stash of money can help get you out of an unexpected financial rut. When your car breaks, or a medical emergency, this fund can keep you from going into debt. Financial experts recommend at least six months’ worth of savings for an emergency fund. However, if that’s unrealistic for you, start smaller: set aside enough money for a week’s worth of groceries, or one month of a mortgage, and build from there. Consider setting up an automatic deposit from every paycheck that goes into this account.
Be Wary Of Credit Repair Companies
Tempting though they may be, credit repair companies that promise to rebuild your credit quickly don’t always work. Unfortunately, they can sometimes make your existing debt worse with their fees and often can’t do anything for your credit that you can’t do yourself.
How A Lawyer Can Help Prevent Home Foreclosure
If you receive a foreclosure notice in the mail, a foreclosure defense attorney at Handin Law can help. We can assist you in delaying the foreclosure for as long as possible and help you understand your options, such as:
- Modifying your existing loan
- Ensuring that your lender is acting fairly
- Mediating between you and your lender to work out a plan
- Defend you in court
- Provide advice during the foreclosure process.
Home Foreclosure Attorneys In South Florida
Home foreclosure is a devastating experience: one you don’t have to walk through alone. Working with a foreclosure attorney can often make the difference between losing and keeping your home. To learn more about all our legal services, call the Law Offices of Gary I. Handin, P.A.at 954-796-9600 for a consultation.