Like bankruptcy, foreclosure stays on your financial record. It impacts your credit score. In the future, lenders will be able to see that you didn't pay on your loan and lost your house, and it can impact your ability to get new loans and lines of credit.
So, how long is this going to last? Generally speaking, the foreclosure will remain on your financial record for the next seven years.
In this time, it can reduce your credit score. The good news is that it should automatically get removed after that time, but that's still seven years of reduced borrowing capabilities. That's a big deal in a society that is largely built around credit, with things like home mortgages, car loans, student loans and credit cards.
One key thing to note is that the seven years starts when you miss that very first mortgage payment. Foreclosure itself can take months. Your lender is obligated to send you certain notices over a set amount of time. If you do something to slow it down -- like filing bankruptcy to get an automatic stay on the foreclosure -- that makes it take even longer.
In other words, foreclosure is not something that happens overnight. You have plenty of warning. But that seven years starts counting down long before you actually have to move out of your house.
It is important to really understand the foreclosure process, the options you have and how this is all going to impact your life moving forward. The more you know, the easier it is to figure out what course of action helps you the most.