Going into Foreclosure – Know Your Options

Foreclosure

Going into foreclosure is typically the last resort for borrowers in default. Foreclosures have a lasting impact on your credit for many years, making it very difficult to apply for another mortgage or get approved for a car loan.

However, sometimes foreclosure is the only option in certain circumstances. This article will explore the foreclosure process and the consequences that come with going into foreclosure.

What is foreclosure?

There are generally two types of foreclosures:

  1. Judicial foreclosure
  2. Non-judicial foreclosure

Judicial foreclosures are traditional foreclosures that are decided within the court system as opposed to non-judicial foreclosures, which take place outside the courtroom.

The foreclosure process is typically initiated when the borrower fails to make several mortgage payments in a row. The lender sends a notice of default, usually after 90 days of no mortgage payments. However, due to the lengthy process and cost, foreclosure is typically a last resort for borrowers and lenders.

Foreclosure is a process that varies by state, so you should do plenty of research on how your state handles the foreclosure process.

What is foreclosure?
Reasons to go into foreclosure

Reasons to go into foreclosure

There are many reasons why borrowers have their homes foreclosed upon. Below are the most common causes of foreclosure:

  • Job constraints. Life happens, and sometimes people lose their jobs or source of income for one reason or another. The loss of a job is a common precursor leading to foreclosure because the borrower can no longer pay their mortgage. 
  • Medical emergencies and debt. Unexpected medical emergencies can be expensive and put you in debt. Even those covered by insurance may still be on the hook for thousands of dollars, wiping out your savings and emergency fund.
  • Death of a spouse. When a spouse who was the primary breadwinner dies, the surviving spouse may not have the resources to meet the mortgage payment (especially when the death is unexpected).
  • Natural disasters. Events like hurricanes, tornados, and wildfires are natural disasters that can affect borrowers’ ability to pay their mortgage. 

Consequences of foreclosure

Many significant consequences come with going into foreclosure, including:

  • Home eviction. The foreclosure process gives the lender the right to seize the property if the borrower cannot keep up with their payments. This means the borrower is evicted from the home and must find somewhere else to live.
  • Major credit damage. Foreclosures may bring your credit score down over 100 points and take years to recover. This is why foreclosure should be your last option if you can’t find a way to make your monthly mortgage payment.
  • Inability to apply for other loans. A foreclosure on your record is a major red flag for lenders considering issuing a loan for other purposes.
Consequences of foreclosure
Final Thoughts

Final Thoughts

If you’re facing foreclosure, you should do everything you can to find a way to avoid it. For many people, the solution is a short sale. This happens when a borrower isn’t able to make their mortgage payment and the bank sells the house for less than what’s owed on the mortgage. Call KAYA HOMES at 516-464-8500 with any questions on the short sale process.

Find out why Kaya Homes is the leader in Long Island real estate and are your go-to realtor in the Lynbrook, Oceanside, Malverne, Hewlett, Valley Stream, East Rockaway, Woodmere, Cedarhurst, Hewlett Harbor, and Freeport area. https://www.kayahomesny.com/

Wed, 07 Sep 2022 15:33:59 +0000

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