Falling behind on your mortgage payments brought enough trouble to your door, but now you must consider the full impact foreclosure has on various aspects of your life. What ill effects do you think your credit score could suffer?
No matter what lead to your foreclosure, you must determine how to minimize the financial fallout. Understand how long you can expect to see a foreclosure mark on your credit report.
Foreclosure can remain on your report for seven years
From the date of your first missed mortgage payment, a foreclosure can show up on your credit report for the next seven years. Within that window of time, you may have a hard time proving to lenders that you are not a risk.
As for your credit score, there is no specific formula that lets you know specifically how many points a foreclosure knocks off your score. That is because so many factors determine your score. That said, because of the serious nature of foreclosure, expect your credit score to take a serious hit.
You may qualify for another mortgage after foreclosure
A foreclosure does not prevent you from securing another mortgage. How long you must wait to apply for another home loan depends on the mortgage type. For instance, you must wait seven years for a standard home loan, two years for a loan from the Department of Veterans Affairs and three years for an FDA home loan.
You can avoid foreclosure
You have options for avoiding foreclosure and its impact on your credit score. One is selling your home for less than what you owe, known as a short sale. You can also voluntarily turn your home over to the lender.
Do not give up after learning about a potential foreclosure. You have options that help you control this unfortunate narrative.