Your guide To The Foreclosure Process

The foreclosure process can be a difficult and confusing one for homeowners. This blog post is meant to guide you through the steps of the foreclosure process, what it means for your future, and how it impacts your credit score. You will also learn about some of the resources available to help you with this situation if you find yourself in danger of losing your home due to foreclosure.

1. What is a foreclosure?

So what is a foreclosure exactly? Foreclosure is when a bank takes your home because you are unable to keep up with monthly payments. This usually happens after missing at least three mortgage payments in a row, but the foreclosure process can vary from state to state and even between lenders so it's important that you have an understanding of what steps might happen next if you find yourself in this situation.

The foreclosure process begins when you receive a notice in the mail from your lender and is also indicated by a sign posted on your front lawn. This letter typically gives you three to four months before they take back possession of the home so it gives you some time to look for other solutions or find out whether refinancing might be an option.

Foreclosure can also impact your credit score, which means that you might be unable to purchase a home again for quite some time. Fortunately there are other options available if this happens such as working with HUD approved foreclosure counseling services or using the Home Affordable Refinance Program (HARP) .

If you're interested in learning more about the foreclosure process you can also visit the HUD website to learn more about their resources.

2. How does the process work ?

The foreclosure process begins when you stop making your monthly payments to the lender. The timing varies depending on what state you live in, but typically it takes about three months for them to begin the formal process once they have stopped receiving payment from you. At this point, they will send a notice of default and then start proceedings through lawyers if that letter is not successful in getting you to make a payment again.

After that, the process can vary depending on state laws and your lender but they might file a notice of foreclosure or even send an eviction letter if it's been more than 90 days since you've missed your payments. If this happens then there are typically two possible paths forward: either you can negotiate a repayment plan or they will file for foreclosure.

If negotiations don't work and the lender does proceed with filing for foreclosure, then you might be able to find out about your options by contacting a HUD approved counselor at this point. This is typically when homeowners realize that there are programs available such as HARP which could help them refinance and keep their home.

If the foreclosure process is moving forward then you might receive a summons to go to court, but it's worth noting that in some cases this can be skipped if your lender obtains an expedited judgement. You also won't need to appear in court for many lenders after they get the final judgement of foreclosure against you.

There is also a process called redemption which can allow you to keep your home if the lender agrees. This usually happens when they reach an agreement with you on what amount of money or property will be handed over in exchange for not taking possession of the house. It's important that this negotiation takes place before the final judgement though and most lenders won't permit it after that point.

Once you reach this step then the only decision left is whether to appeal or not, although most borrowers choose to do so at this stage because of how difficult it can be for them to find another place to live if they are evicted by their lender instead. According to statistics from RealtyTrac , almost one million homes were lost to foreclosure in 2015 and another three hundred thousand faced that same fate last year.

3. The impact on your credit score

One of the biggest risks associated with foreclosure is how it impacts your credit score. If you're wondering why this happens and how to avoid it, then there are a few important things for you to consider:

Foreclosure has an enormous impact on your credit rating because lenders see it as a negative behavior which suggests that you were unable to manage debt responsibly. This impacts your score for up to seven years after you've completed the foreclosure process, which means that it could be difficult to purchase another home or make major purchases during this time.

Foreclosure can also impact your credit score in other ways because of how closely linked these two factors are with many lenders, although some will still give you a chance to rebuild your score if you have the cash available for a deposit.

The other way it can impact your credit rating is by appearing on public records, which will show up when anyone makes an enquiry about your financial history. This has become much harder to avoid since many of these reports are now sold online because that means they are likely to end up in the hands of a potential landlord or employer at some point.

Even if you don't have any other negative marks on your credit report, then having a foreclosure will still make it more difficult for you to get approved when applying for loans and mortgages going forward because it is such an extreme event which suggests that something went very wrong financially.

4. Resources to help you through this difficult time

As you can see, the foreclosure process is complicated and it's not something that anyone wants to go through. It's important to remember though that there are many people out there who have been in the same situation as you at some point and they found a way to make things work for them again after they restructured their financial life.

The first place you should start looking for help is the HUD website which has a number of useful resources to give foreclosure prevention advice and information. They also offer free legal representation if your home was unlawfully foreclosed upon, although this service will depend on where you live and how much money you make each year because these programs are mostly funded by federal grants.

Another good resource is Foreclosure.com which has a number of articles about avoiding foreclosure and what you should do if it does happen to your home while also providing links to some reputable housing counselors in your area who can give professional advice on how best to deal with this situation.

There are always going to be new services appearing online that claim they can help you save your home, although the best way to find out whether they are legitimate or not is by checking what other homeowners have said about them through online reviews. This will also provide more information about how much it costs and if there's anything else that people want to know before hiring their services.

Summary:

In conclusion,  foreclosure is a difficult situation to deal with but many people have been able to rebuild their lives after it happened by taking advantage of the free programs that are available from local authorities or hiring experts who can help you save your home.