Nobody buys a home expecting to one day face the potential for a foreclosure, but circumstances that were out of your control can sometimes find you in that situation. Foreclosures are a real hit to your ego, for sure, but they can also have a huge impact on your future, affecting your credit and more.
Speaking of your credit, not surprisingly, foreclosures on your record make it extremely difficult to purchase a home again in the immediate future. Most lenders will want to see an improvement in your credit rating over a period of 5 to 7 years before they will consider your loan application. That period of time can be shorter if there were extenuating circumstances that you can provide documentation for and that have been resolved.
Foreclosures also result in a drastic drop in your credit score. It depends on where you started out, but a drop of anywhere from 85 to 160 points is possible. The consequences of that can be far-reaching, including affecting employment, insurance costs, purchasing a new car, and obtaining some utilities.
In addition, your money troubles might not be over. Foreclosures can also have serious tax consequences. If the lender sells your home for less than was owed, leaving the bank unable to collect enough, the rest is considered income to you, and you’ll need to pay tax on it.
If you are facing a foreclosure, the best thing you can do is get your home sold so that the lender can be paid before they finalize the foreclosure. In order to make this process go quickly, give us a call at Widespread Properties. Once we get your information, we will make a cash offer within 24 hours. Since there are no fees or commissions and we pay all closing and repair costs, you can avoid foreclosure and the hit to your credit rating. Call today to learn more.