Seriously. Don’t Let This Happen to You!

Not-so-fun fact: One out of every 215 homes was foreclosed on in 2018.

It’s hard to think about losing your home. But, if a homeowner can’t make their mortgage payments, then the lender has the legal right to take possession of the property. This is called foreclosure. (And it’s a huge reason to make sure you can actually afford the home you want to buy!) Federal law states that, in most cases, the loan needs to be 120 days past due before the lender can begin the foreclosure process.

If you think you might be heading down the road towards foreclosure, it’s important to act quickly. There are lots of consequences related to foreclosing on your home. And none of them are good!

You’ll feel the pinch right away.

Homelessness is the most immediate consequence of foreclosure.

Once your loan has been in default for 120 days, you could receive a “notice of seizure”. This notice tells you that the lender is exercising their right to seize the property. Although laws and time frames vary by state, in Louisiana the lender is allowed to sell the property 60 days after issuing the notice of seizure.

After that, you (the borrower) have very few rights. Depending on a variety of factors, a Louisiana foreclosure can be completed within 180 days of the first missed payment. In other words, the borrower in default can be homeless within 6 months!

You’ll pay for it in the future.

Do you want to know the number one, absolute, no good, awful thing about foreclosing on your property? You may still owe money to the lender. Even though you no longer own the house!

If this seems unfair, remember what a mortgage is: a promise to the lender that you will repay the full amount of the loan, plus interest. In short, you agreed to repay the loan, no matter what.

In the case of foreclosure, the property is considered “collateral”, so it can be used to pay down the loan amount. But, if the sale does not cover the full amount of the loan, the borrower remains responsible for completing the terms of the loan.

For example, if you owe $200,000 on your loan, and the lender is able to sell the property for $150,000 – you’ll still be on the hook for the difference of $50,000.

And the consequences could extend 7 years in the future.

Your credit report can carry evidence of a foreclosure for years. Typically, it remains on your report for seven years. (If the mark doesn’t “fall off” your credit report on its own, you’ll want to dispute the mark as a credit report error.)

According to a 2011 study reported by FICO (the credit scoring agency), a foreclosure on your credit report reduces your score by 100 points or more. Not only that, it could take 7-10 years for your credit score to recover!

As much as we hate to think about our credit scores, lenders think about them a lot. Therefore, a foreclosure on your report impacts all kinds of borrowing, including car loans and credit cards. And future mortgages, of course.

But the problem goes way deeper than that! Here are some other examples of people and companies who might check your credit:

               

               ·         Employers: Some employers consider credit scores when hiring, especially if the job                          involves handling money.

               ·         Insurance agents: Your score could impact your auto, renters, or homeowners insurance                    since your score is seen as an indicator of how responsible you are.

               ·         Utility companies: You may have to pay large deposits if your credit report is negative.

       

               ·         Cell phone providers: Credit scores are taken into account for some plans and lease                            agreements.

               ·         Landlords: They want to make sure you’re capable of handling the monthly rent payments.

Have you missed a payment or two? All is not lost!

Please reach out to us or someone else who can help you. The reasons to foreclose can be very personal, and very painful. And they can seem unavoidable. But my team specializes in solving difficult problems. We've seen it all, and we know we are positioned to find your solution. We don’t want to see foreclosure happen to you!

Please contact us if you have questions or are concerned you may be facing foreclosure. Let us be your Real Estate SOULution!

www.ibuylouisianahomes.com     225-800-4445