Posts Tagged Foreclosure

What happens during a foreclosure?

Are you a homeowner with foreclosure questions? What happens during a foreclosure is the most common question that might come into your mind. Well this article tells you all about it. It is rather a step by step process where the lender tries to get their money. Now if you fail to pay the first payment, the lender sends you a late notice. If you ignore it, he will resend it after a certain period of time. If again it is ignored by you, then the lender sends a final notice demanding the full payment. This is generally known a acceleration clause and is included in most mortgage contracts.


Once a person is back with his payment by 3 or 6 months, the lender invokes the acceleration clause in the mortgage contract. The bank will now demand the whole payment along with any legal fees or any other late payment charges. This is where the foreclosure gets started. The lender sends a certified letter of foreclosure to the homeowner by any local sheriff. He also gets it up in the legal section of a local newspaper of publication. Here the homeowner tries to defend himself by working out with the bank. But the bank will only stop the foreclosure if they receive the full payment for the home.

Finally the court date is set where the homeowner, the lender and other financial interest people will attend for the auction of the home. The homeowner has still the facility to save his home by working with the bank and making the payment in full. But if the homeowner fails to pay or save his home, the auction date is finally decided. This is generally called the foreclosure sale or a sheriff’s sale. Anyone taking part in the action will have to deposit a stipulated check. At the auction the highest bid wins the property. But apart from all these there are a number of ways by which you can prevent foreclosure. You can find companies in your city dealing with such services over the internet.

Which is worse bankruptcy or foreclosure?

In this financial crunch, when millions of people face foreclosure or declare bankruptcy, it is really important to know which is worse foreclosure or bankruptcy. Both bankruptcy and foreclosure will have negative affects on your credit score. So which you should opt for will depend upon your situation.

Foreclosure is considered as the worst financial situation that a man can face. Foreclosure will have huge negative affects on the credit report and after you face foreclosure, you may not even get approved for a loan in coming 7 to 10 years and your credit score will be dropped by 250 to 300 points. So we should always try to avoid foreclosure as much as we can.

Though bankruptcy will have huge negative affect on the credit report and it is not desirable to face bankruptcy, but bankruptcy is actually a relief for those people who are facing foreclosure. Bankruptcy is actually the last option to avoid the foreclosure and to save yourself from the harassment from the creditors. But the thing is that if you want to file bankruptcy then also you need to get approved to file bankruptcy to avoid fraud.

So even though both foreclosure and bankruptcy both have huge negative affects on the credit, people like to choose bankruptcy as it also gives some relieves too.  Search foreclosure listing properties in your city and state.

Is Bankruptcy Worse than Foreclosure for your Credit Score?

Bankruptcy and foreclosure, both your have a huge negative affect on your credit report and will drop your credit score but foreclosure is the worst thing and borrowers try to avoid it and even files bankruptcy to avoid foreclosure. Actually Bankruptcy is a relief tool that has been provided by the Federal Government and the bower or the consumers use it as the last resort to avoid foreclosure or the harassment from the creditors or lenders.

Foreclosure and bankruptcy has similar affect on your credit report. Foreclosure will drop your credit score by 250 to 300 points and the bankruptcy will affect your score almost the same but if a lender find out that the borrower has faced foreclosure in recent past then he may not approve a loan and even if any lenders approve a loan; the rates will be comparatively much higher. So it is better to consult with an attorney to understand minute affects of both foreclosure and bankruptcy.

As it seems that both foreclosure and bankruptcy will have similar negative credit affect and bankruptcy is a relief tool to avoid the harassment from the creditors, bankruptcy is a better option to choose but as it is previously said that bankruptcy should be the last option to choose to avoid foreclosure and the court will also check whether you are eligible to file bankruptcy or not.

Deed in lieu of foreclosure:

Deed in lieu of foreclosure is one of the last options that you can take to avoid foreclosure. Deed in lieu of foreclosure is a type of deed that a borrower signs it to the lender to pay off a loan which is already in default and also to avoid foreclosure proceedings. Now the defaulted borrower cannot sign a Deed in lieu of foreclosure to the lender without the lender’s consent. The lender also must accept the Deed in lieu of foreclosure.

A Deed in lieu of foreclosure offers many advantages to both the lender and the borrower. The lender can save lots of money; which he might have to spend for the foreclosure proceeding; if the borrower is ready to sign the Deed in lieu of foreclosure. The borrower can also avoid the harassment and also the deficiency judgment. As soon as the lender accepts the Deed in lieu of foreclosure, the borrower is free from all his liabilities. But the borrower may have to pay tax on the forgiven debt.

A Deed in lieu of foreclosure will have a huge negative affect on your credit report and you may not be able to get a loan in coming 5 to 7 years. The credit affects of Deed in lieu of foreclosure is similar to foreclosure. Your credit score will be dropped by 250 to 300 points and it will be shown on your credit report for 7 to 10 years. So the borrowers choose this option as their last resort to avoid foreclosure.

How long after foreclosure can I purchase a home?

“How long after foreclosure can I purchase a home” is a common question that comes into our mind when we face foreclosure. Now a days foreclosure has become a daily phenomenon. We all know that once we face foreclosure, it affects our credit score heavily. Foreclosure drops your credit score by 250 to 300 points and it is shown on your credit reports for almost 10 years.

Foreclosure is not the end of our life. We should start afresh and try to improve our credit score. Generally you can buy a home in 5 to 7 years after foreclosure but if you can improve your credit score quickly by making all payments to all your debts, then you may be able to get a mortgage loan lot earlier.

Now if you have faced foreclosure in extenuating circumstances, which means thing happened in the circumstances beyond your control, then you may be able to get a mortgage loan in 3 to 5 years. Job loss, job transfer, illness, accident etc comes under extenuating circumstances.

So if you face foreclosure not in extenuating circumstances, then you may have to wait for quite a few years. The best thing that you can do in this time period is improving your credit report so that you can be able to get the mortgage loan with better rates and terms.