Do You Understand Foreclosures?

By Author: Jennifer Baxt
Total Articles: 200
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For anyone who goes through a foreclosure process, it can be a very difficult situation for them, as well as their family and friends. It is sad to say but foreclosure is becoming very common thanks to the poor economy and sub-prime mortgage crisis. You may be worried about yourself and your family with your home. There is nothing wrong with that, but with an understanding of how it works, you will find that you may be able to manage foreclosure and the effect that it can have on a person's life.

Foreclosure occurs when the owner of a property can no longer make their payments on the loan. At this point, the property can be both seized and sold because of the non-payment. The owner of the property does not get any money from this, and the sale of the property is used to pay off what is owed on the mortgage, with the bank taking the rest.

To get to this point, you will have had to go through three to six months of missed payments on your property owner to get a Notice of Default. This notice states you are facing a foreclosure process, and that you are entering the reinstatement period that goes until five days ...
... until the home is auctioned off.

If the default is not paid up within three months of the notice, the sale date of the foreclosure house begins. A Notice of Sale will be placed on the house and in the newspaper for three weeks to alert others who may wish to either collect on a debt or buy the foreclosure property (which is becoming very common). At this point, the homeowners would have left the house, and if they have not then the sheriff's office will show up and evict them. This is not a good situation to be in, and far too many people these days are going through it.

However, now that you know what happens in a foreclosure, what is there to know about how it can personally affect you? Well, the truth of the matter is that a foreclosure is going to leave repercussions on your identity for many years to come. A foreclosure is very similar to claiming bankruptcy, except the foreclosure will only stay on the credit report for seven years, rather than the 10 of bankruptcy. As well, your FICO score will most likely plummet many points, possibly as much as 100 to 200 points. Essentially, having a foreclosure on your property will destroy your credit and literally prevent you from getting another house again for seven years.

Getting foreclosure is not something you want yourself, or anyone you know, to go through. It can severely alter the life of an individual and has spelled the end of many relationships because of the stress. Sometimes it is through no fault of the individual that they cannot pay their mortgage. Perhaps it was layoffs or costs to take care of a family member, but the result is always the same.

If you can, try and work something out with your bank to prevent foreclosure from happening to you. If you cannot, then you can always repair your credit after you have gotten back on your feet.