Foreclosure rates peaked during the recession and are still high today. If you can’t pay your mortgage and haven’t been able to escape being foreclosed, then how do you move forward?
Your immediate concern will probably be when you have to move out – and that depends on many factors. If the house is sold at a foreclosure sale, the new owner will probably want you out as soon as possible.
Businesses that buy and resell foreclosed homes, though, can take some time to actually send an eviction notice. If the new owner has no experience buying a foreclosed home, that can also buy you some time.
In some cases, the termination notice may come with a “cash for keys” offer – a lump sum you accept if you agree to move by a certain date and leave the home in good condition. If the termination notice doesn’t come with such an offer, it’s worth suggesting it. It’s a lot cheaper for them than forcing you out, and it might cover the security deposit on a rental.
If your home is not sold, then the bank will keep possession for a while, and you may be able to stay for several months, especially if there are a lot of vacant homes in your area.
As soon as foreclosure becomes inevitable, you should look for a new place to live. This can be challenging, especially if you have little money. Some landlords will accept tenants with credit scores as low as 580, but others may see a foreclosure and simply say no. It might take some time to find a landlord who will rent to you and they are likely to demand a higher security deposit. So, you should start looking as soon as it becomes clear you are not going to be able to keep your home.
Unfortunately, your credit score will take a major hit. You may also be considered indebted for the “deficiency” – the difference in value between your loan capital and what the bank was able to sell the house for. The foreclosure will stay on your credit report for seven years, and many lenders will not give a mortgage to someone with one on their report. This includes Fannie Mae. (Some lenders, however, are more forgiving). You also need to note that debt you do not have to pay is considered income by the IRS. All of this means you are going to need legal and financial advice on how to get your life back on track and your credit score up as quickly as possible.
First Legal is a law firm Miami-Dade County, Florida, that specializes in foreclosure and real estate law. We can help you fight a foreclosure or help you to get back on your feet if you have suffered one. We also handle bankruptcy and can advise on whether filing for bankruptcy can help you save your home or, at least, your credit score. Contact us today for more information.