As most people know, a foreclosure is the result of payments not being made on a mortgage. There are a lot of reasons that homeowners stop making their mortgage payments, ranging from the loss of a job and income, to the loss of a loved one’s life who was the primary bread winner or primary payer on the mortgage, to unexpected medical payments or a litany of other reasons. Regardless of the reason for the payments not being made, the result is the same: foreclosure. If this is your situation, please know that it’s better to take action now before it gets worse and you lose your chance to stop the lender’s legal proceedings.
A lot of people going through a foreclosure cave to the pressure. The endless calls and letters from your lender, the mounting pressure to pay mortgage payments which you already don’t have the money to pay, the pressure to choose between which bills to pay and the sleepless nights can make many homeowners bury their heads in the sand. This will 100% not help your situation. As uncomfortable as it is to admit – this will not go away on its own. You have to act quickly. Many people survive foreclosure by being honest about their situation and setting themselves on a corrective course. You can too! But if you don’t…that’s what this article is about. Read on to learn some great information on four impacts of foreclosure of your Indianapolis house if you let it go that far.
Credit
If your friend told you that he had lent $500 to your buddy Frank, and that Frank never paid him back…would YOU lend any money to Frank? Of course not! You don’t want to lose your money. Banks and other credit institutions are the same way. They’re charged with using their investors money to make more money, so naturally they have to be careful with it and not lend that money to high risk borrowers. It’s likely that you probably already have some dings on your credit – those 30, 60, and 90 day late payments that got you to the point of foreclosure in the first place. However, if you let your mortgage be foreclosed and THAT ends up on your credit…that’s a huge problem. Lenders will see that you had the late payments, and they can assume you had a struggle. Possibly no big deal to them. Everyone goes through struggles sometimes. But…if they see that you let it go all the way to foreclosure now they will start thinking about your mindset toward your debts, what you owe, etc and they will be hesitant to lend to you. In the early years following the foreclosure of your Indianapolis house they may not lend to you at all, frankly. In the subsequent years, you’ll probably get lending, but it will be at extremely high interest rates. Oh…years? That’s right. Bad credit stays on your credit report for seven years my friend. No matter if you had great credit before the foreclosure, just know the foreclosure is going to destroy your credit rating for the foreseeable future. There is hope…typically if you are able to get some kind of credit card or loan (they’ll be super high interest) and you make on-time payments for three straight years you’ll be able to repair your score in that time. Real talk though…if you just don’t let your mortgage get to the point of foreclosure you’ll be better off.
Fees and Deficiency Payments
Did you know that when your lender forecloses and the house is sold at auction, the person or entity that buys it may actually buy it for less than what you owe on the mortgage? Oh yes sister, this happens all the time. All. The. Time. So what happens to the difference between the balance of your mortgage and the new owner’s purchase price? Well that’s called “Deficiency“. Deficiency can and most likely will be assigned to you by the court and the lender will now be chasing you down to get payment for that. “But…I thought the phone calls and harassment would stop after the house was sold at the auction???” Right. Except the lender wants ALL of their money and they’ll get it. Wage garnishments, tax refund garnishments, liens on any other property you have. You name it. They’re going to get their money. Hard truth. I’m sorry. Oh, and don’t forget about the court costs, fees, and lawyer fees (for the lender). The judge will include those for the lender too. You’ll pay all of that. So again…you can probably see the huge costs associated with letting your Indianapolis house be foreclosed on and that you’re better off taking action now to stop the foreclosure. If you’re still not convinced…read on.
Equity
Remember when you bought your house and got that smoking deal? You even put a few grand down to lower your payment! Then appreciation came and did its work and voila! Your house was worth $100k more than what you owed on it (in tip-top condition)! That’s your equity, Richie Rich. Sure, even if you sell your house there will be costs and expenses with that, but are you ready to give 100% of YOUR equity away to the bank? Because that’s what could happen if you let them foreclose. We already talked about Deficiency and that’s a very common thing I’ve seen occur to homeowners whose house was sold at foreclosure auction. But say your house was the golden goose and sold for more than the mortgage balance. It sounds like you immediately would be reimbursed those excess proceeds of the sale, right? Well…yah. Hold on. Those excess proceeds are now going to be used to pay any junior liens on the house (2nd mortgage, equity line of credit, HOA lien, etc), the court fees and such that we already talked about, AND any of your other creditors who responded to the lender’s initial legal action. So…even if there is an excess of proceeds from the sale you STILL might not see a dime of it. If all of those things are satisfied and there’s still some left over cash then sure, the court will disburse it to you. Aren’t you LUCKY??? Nope…it would’ve been easier to salvage your true equity before it ever got to that point. After all, it is YOUR equity.
Standard of Living and Stress
A lot of times people don’t think about how a foreclosure will affect them beyond their credit score. But do you really know all the ways your credit report is used to evaluate you? How about car insurance, rental applications, and job applications just to name a few. Letting your Indianapolis house go to foreclosure can have a drastic effect on your overall standard of living. And stress? Well you’re probably already not sleeping a lot. You’re probably grumpy when you are awake because you’re thinking about the foreclosure. Maybe you’re starting to abuse alcohol. How bad are you going to let it get? How much worse CAN it get if you can’t get a replacement car when yours breaks down, can’t get a new house or apartment for your family to live in? The weight of a foreclosure can be crushing, and can destroy your standard of living and way of life. It doesn’t have to be. Don’t let the foreclosure of your house go all the way through – stop foreclosure now!
317 Home Buyers understands all of the ways that foreclosure of your Indianapolis house will impact you. If you are facing foreclosure, don’t wait until it’s too late. If you are in foreclosure now, let 317 Home Buyers solve your problems. Ask any questions you like, with no obligation because 317 Home Buyers is here to help you. Give 317 Home Buyers a call right now at 317-623-4734 or send us a message!