Many people who are facing foreclosure problems are most likely experiencing emotional havoc and hardships following this unfortunate occurrence in their lives. This is because foreclosed homes are usually sold at lower prices compared to what it’s originally worth. Anyone could easily understand how things can be a little rougher for them. Here are the top problems faced by people in foreclosure.
Credit Fallout
A mortgage default is really damaging to your credit score. Your creditors will find it hard to get back what you owe them when your home is foreclosed. This huge blow will make it technically impossible for you to apply for new loans in the near future.
Trouble in buying a new home
An FHA loan can’t be approved for 3 years after foreclosure completion. Three years is really a long time. On the other hand, with Fannie Mae, the length of time was increased to 5 years for people who have had a foreclosure. They think of this as the best way to discourage reckless borrowers who cannot repay their mortgage wisely.
Potential employers’ bad impression on foreclosures
A lot of employers actually conduct a credit check to their potential employees. With this, one can expect the subject of their foreclosure coming up during the job interview. Although such topic is a personal matter, it is indeed a reflection of how the potential employee manages his/her resources. This could affect the applicant more when applying for positions related to finance.
Fact is, most employers do credit checks before they can employ auditors, accountants and even cashiers. This could adversely affect anybody’s chances of landing such jobs unless they have a good explanation to offer potential employers.
Looking for a new place to reside
Obviously, you need to find a new home when your current one is foreclosed. The dilemma here is that new homes would require rental deposits. Those with foreclosed records may never be a suitable candidate for rentals because landlords will definitely research about their credit rating and they cannot expect it to be satisfactory with the home foreclosure record.
People who have had a foreclosure are cash strapped and this would pose the biggest problem when they are trying to find a new place to live. Some experts will recommend considering cash for keys program as soon as the realization about pending foreclosure hits. This program requires owners to vacate their home voluntarily and leave it spotless.
Living through the loss credit-rating
Not surprisingly, there are emotional difficulties that comes with a foreclosure. Leaving your home and looking for a new neighborhood is never an easy thing. The kids and indeed the whole family will be affected negatively by a foreclosure. Finding new schools and community can easily take a toll on the whole family. Counseling would be the right thing for everyone but, because of the added financial strain, most do not seek counseling.
What options can we really have after a foreclosure? Well, there are options but they are rather limited. With a federally insured FHA loan, in some instances you can secure a mortgage after foreclosure. However, you will need to prove that you have been a good payer right after the foreclosure. At the end of the day, it all boils down to the need for careful planning when buying a home.