Losing your home
“Losing your house is a traumatic experience. In addition to the loss of your home, you will probably experience significant impacts to your credit. In addition, the target of collection agencies. However, it can give you a chance to start fresh and be free of your mortgage.”
Losing Your House
The process by which you lose your house in a foreclosure varies from state to state and can vary depending on the type of loan you have. Usually, when you miss a few payments, you’ll get a warning.”If you don’t make your back payments, your house eventually will be sold at an auction. Your state’s laws will determine how long you have to move out after the auction sale. You need to decide to either allow your house to be foreclosed upon or you work out an arrangement. A great option is to ask for a “deed in lieu of foreclosure” where you give the ownership of the property to the bank. This saves the bank from the inconvenience and expense of foreclosure. At the same time, it also keeps you from having a foreclosure on your credit report.”
Once you lose your house to the bank, you may not be through with responsibility for it. ” Several states allow lenders to pursue the difference between what you owe the bank and what they recover from the sale of your house once they take it back. Talk to a real estate attorney to find out what your liability could be. If you negotiate a deed in lieu of foreclosure, the attorney can also help you ensure that the bank agrees not to pursue you for the deficiency after accepting the deed.”
Credit After Foreclosure
A foreclosure affects your credit report in two ways. The first is that your credit score will suffer from the late payments leading up to the foreclosure. “The foreclosure itself will usually decrease your credit score by around 100 to 150 points.”” It will stay in your credit report for at least seven years.”
One of the benefits of losing your house is that you will have a sometime during which you can live in your house without making any payments. During this time build up your savings. Eventually you will need to find another place to live. Losing your house has another benefit. You’re free to move somewhere less expensive so that you have more disposable income. If you want, it’s an excellent time to do a big move and live somewhere new. I would suggest to moving to another state that has a lesser cost of living.
If you can afford the $500,000 house that’s great. Buy the $250,000 house. Why? because life happens and unforeseen circumstances do occur. Such as property taxes going up, job loss, sickness, car accidents you name it Life will conjure it. Also, sometimes unforeseen repairs to the house may occur as well. If you play it safe by under budgeting yourself then you are creating a safety net. *Remember, it’s nice to impress your neighbors or friends but they are not going to help you pay your mortgage. So buy something that you can afford.