Foreclosure can be a slow and intimidating process, but fortunately there is plenty of opportunity to steer the foreclosure in a direction that salvages your future. Sadly, foreclosure is entirely avoidable, yet many people often damage years of their lives because they simply weren’t fully informed of the consequences and took no action to prevent the process.
Regardless of the circumstances that led to the situation, proactive homeowners who take steps to avoid the impending loss of their home can better shape their future. Even as they start receiving correspondence from the lender, there is an opportunity to engage with the lender and strive for a mutually beneficial resolution.
The road ahead will be difficult for those who choose to keep their heads in the sand and wait for the lender to foreclose. Below, you can read of five ways the foreclosure of your house in Alabama will impact you in the future.
Foreclosure is Costly
One of the ways the foreclosure of your house in Alabama will impact you is the expense; your attorney will charge a hefty fee, not to mention any fees that accumulate on the mortgage loan or from the process of foreclosure itself, which can be very substantial as well. Allowing your home to fall into foreclosure is a procedure that is costly not only to you as the homeowner but to the lender, the local government, and local property owners. It is a highly inefficient activity and no parties enjoy the process.
Loss of Equity In Your Alabama Home
Another way the foreclosure of your house in Alabama will impact you in the future is by the loss of equity. As homeowners pay down their mortgage balance, the difference in the amount owed and the home’s current market value is known as homeowner equity. As the fees and costs of the foreclosure add up, the equity you’ve worked hard to build over the years will slowly begin to drop. Additionally, lenders involved with foreclosures typically go with the lowest appraisal value, further depleting the level of any remaining equity you may have in your home.
Future Credit Issues
When your house in Alabama goes into foreclosure, one of the first consequences you’ll face is the impact on your credit score. Although this negative mark will only stay on your credit report for seven years, it can make it harder to qualify for credit in the future. While it is still possible to access credit with a foreclosure on your record, you can expect to pay significantly higher interest rates. However, by focusing on rebuilding your credit, you can improve your creditworthiness over time and take steps towards securing your financial stability.
Future Homeownership
Qualifying for a mortgage after you’ve gone through a foreclosure will be difficult and in some cases impossible. Under several government programs, it will be impossible for the next seven years; if you qualify for VA loans, the period may be as short as two years following the foreclosure of your Alabama house. There are, however, some extenuating circumstances, such as illness, divorce, or job loss, that will allow these lenders to work with you, so those are definitely worth looking into if you do end up in a foreclosure situation. Also, when you do finally qualify for a mortgage, the bank will generally charge you substantially higher fees and interest rates to adjust for the risk they take on with having you as a customer. This is because you will have a track record of not making payments as contractually agreed.
Future Employment
As more employers run credit checks in the attempt to find more productive workers, your future employment potential has become another one of the ways the foreclosure of your house in Alabama will impact you. If you are in this situation, it’s usually a good idea to hire a professional credit repair company to help you gain back some credibility on your financial record. Although it doesn’t impact your employment for every job, your ability to get hired by a company that would require you to handle money or customers’ financial data would be very slim.
North Alabama House Buyer is here to help folks going through foreclosure or who are in pre-foreclosure. Our company can provide you a fair, as-is, cash offer on your home so you don’t have to experience the foreclosure process. We can also help you avoid the future negative effects that come from foreclosure being on your financial record.
If you are looking for a trusted and local resource to help you in a foreclosure situation, North Alabama House Buyer would be happy to help! You can contact us directly at (256) 824-9181 or send us a message to find out how our custom real estate solutions can be of help to you in a foreclosure situation.