That Craftsman house with the flower boxes in the window and the white fence around it was your Ohio dream home.
You lost your job in a corporate downsizing and just can't find a new one. Unemployment has run out, and you've fallen behind on your mortgage payments. Way behind.
The demand letter from the bank has arrived in the mail. Your mortgage is delinquent, and the bank wants its money by a certain date. If the bank doesn't get the check by the deadline, foreclosure proceedings will start.
Just what does that mean?
Well, once that deadline passes, the attorney for the lender can set a date to sell the home – often within three months. You'll lose the rights to your home.
The effects are immediate. You'll have to move; the kids will have to change schools. With your reduced income, you just might have a tough time finding a place to live. But the repercussions of a foreclosure will last longer than that.
A foreclosure will impact your credit score, too. Estimates from experts in the credit industry state that a credit score can drop 200 to 300 points; a perfect score is 850. In the future, it will be very tough to get a credit card or an auto loan; if you do, expect the interest rates to be high.
A foreclosure will impact your credit report for seven years.
So, what if a couple of years after the foreclosure you have a great job and are back on your feet financially? You've even saved enough money for a down payment on another home.
Will you be approved for a mortgage?
People whose homes have been foreclosed can expect to wait anywhere between three and seven years to be able to buy again. A lender will consider why you defaulted and your current credit score in weighing your loan application. Those who lost their homes because of tough economic times, such as a job loss or medical bills, likely will be looked at more favorably than those who just walked away from their underwater mortgages, for example.
Foreclosure can have long-lasting effects. If you are facing home foreclosure, it's unwise to try to go it alone. An attorney who works on cases concerning bankruptcy and other financial issues can provide guidance and perhaps offer solutions to keep your home out of foreclosure.