Foreclosure

Foreclosure can be a painful process so it’s no surprise then that many people look for alternatives before going down that road.

Be careful though, while these options can bring you instant peace of mind, they can also seriously impact your credit.

Let’s take a closer look.

First of course – foreclosure… If you go this route, it will stay on your credit report for up to 7 years.

Then there’s loan modification. this is a way to reduce your monthly mortgage payment, if you are a qualifying homeowner. But be careful, your credit score may take a hit, depending on how the lender reports your modification.

Another one is ‘deed in lieu of foreclosure’, also known as the ‘friendly foreclosure’. It allows you to just release your home to the lender instead of going through a foreclosure. But get this – it still could get reported on your credit as a foreclosure.

Short sale is when you owe more on your home than what it is worth, but the bank will accept the sales proceeds, and it may forgive you the remaining debt. The good news is that a short sale does not get reported on your credit! you may only have to wait a few years to qualify for a loan.

lastly, it’s important to remember: these options may provide temporary relief, but they do not treat the root problems.

unloading the burden of your mortgage payment is just a first step…

The financial reality of overspending, poor debt management and lack of planning will not go away.

That is why I urge you to get a solid financial plan in place. AddThis Social Bookmark Button