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How Bad Credit Can Lead to Foreclosure
By Francine L. HuffMortgage Credit Problems Columnist
If you've missed
several of your mortgage payments, you may be worried about having your house foreclosed.
While more Americans are having their homes foreclosed--with cities in
What Is Foreclosure?
Some people with bad credit may have trouble finding enough
money to pay their mortgage and other bills. Although a debt consolidation loan
can sometimes help homeowners catch up with bills, those with bad credit may
have a hard time qualifying for refinancing, debt consolidation, or other types
of loans. If this happens, they may have no other financial resources to use
and end up having their home foreclosed upon. The foreclosure process allows
lenders to sell or take back a property to recover the amount owed by a
homeowner who has defaulted on a mortgage loan. The lender will publicly file a
Notice of Default, or Lis Pendens, to get the foreclosure process started.
What Happens to Your
Home?
Once the Notice of Default has been filed, the following
things can occur:
- The homeowner can pay off the amount they've defaulted on during the pre-foreclosure period. Once they've done this they can continue to live in their home a long as they stay current with their mortgage payments.
- The homeowner can sell the property during the pre-foreclosure period and pay off their mortgage loan.
- The home can be sold at a public auction during pre-foreclosure.
- The lender can take back the property in order
to resell it.
Foreclosure filings in the third quarter of 2007 almost
doubled from a year earlier. This process is extremely costly for those involved.
If you, too, end up having your home foreclosed it may stay on your credit
report for up to 10 years. Meanwhile, you may be forced to sell your home under
less than ideal circumstances. Perhaps worst of all is the upheaval of having
to find a new place to live.
Clearly, foreclosure is a drastic circumstance, but very
often it can be avoided. Understanding how the process works can help you find
solutions to keep your home.
Sources
RealtyTrac,
"Foreclosure Activity Up 30 Percent in Third Quarter," by RealtyTrac
Staff
About the Author
Francine L. Huff is a
freelance journalist and the author of The
25-Day Money Makeover for Women. She
has appeared on a variety of TV and radio shows.
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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