How Does A Foreclosure Happen?

A foreclosure happens when you are delinquent on your mortgage payments for more than seven months. At that point your mortgage lender will assume the property. If you are one of the hundreds of thousands of people that are facing foreclosure today then you must have many questions. Here are a few of the most frequently asked questions about going into foreclosure:

How does it affect my credit?

A foreclosure on your record will drop your FICO score between 200 and 300 points. Additionally a foreclosure will remain on your record for up to seven years. A foreclosure on your credit record will affect your ability to buy a home, obtain credit from any lender, and even stop you from being able to rent an apartment or obtain basic utility services.

How can I save my home?

If you want to save your home but have already missed a few payments there are a few things you can do depending on your situation. First and foremost the only way you will be able to save your home is if you are steadily employed. If you lost your job but was able to find other employment at the same pay you should be able to talk to you mortgage company to work out a plan to repay the missing payments and while making your full mortgage payments for little extra a month.

If you lost your job and had to take another job at a pay cut, or if you work on commission and you are not making as much because of the bad economy, you can apply to do a loan modification. A loan modification will allow you to extend your loan, reduce your interest, or both in order to make your payments affordable.

I don't want this home anymore but I can't afford to sell, what do I do?

Some people have had to move or the property in question is an investment property that they can no longer make the payments for. In this situation you may not be vested in trying to keep the property, however you want to avoid having a foreclosure on your record. In this case a short sale may be the best option. A short sale is when your mortgage lender will allow you to sell your home for less than what you and less then the market value in order to sell it quickly. A short sale will still adversely affect your credit, however it will not affect your credit nearly as much as a foreclosure.