Your Foreclosure and Your Credit – What Are the Effects and How Long do They Last? By Edward Packman At Isnare.com Ezine Articles

AS SOON AS I HEAR THE WORD FORECLOSURE, THE FIRST WORD THAT POPS INTO MY HEAD IS - CREDIT. I think of what it does to a credit score and how it’s probably the worst item that could show up on a credit report. I also wonder what the homeowner really understands about his / her credit report and that foreclosure.

THE BAD NEWS IS: a foreclosure will stay on a credit report (in the Public Records section) for 10 years. It will kill any chances of you buying a new home for at least 3 years. Some banks will lend money to a borrower with a foreclosure that’s just over 3 years old (That’s 3 years from the date the foreclosure is finished- not from when it started). Also, a foreclosure will drop your overall credit score quite a bit.

FOR EXAMPLE, let’s say that your credit score was a strong 715 before your foreclosure. Then you had a hardship & your home went into foreclosure. If you were just late on the mortgage and no other debts, that 715 score will probably drop to the mid 500 range. (There are several variables to consider here because your score is determined by the amount of accounts your late on, The amount of debt you carry, the frequency of the late payments, weather it’s an installment loan or a revolving loan, and several more factors. So each credit report is unique. For the sake of this article, let’s just say the mortgage was the only account late.)

THE GOOD NEWS IS: It will NOT kill your credit report for life, you can start re-building your credit almost immediately and it will NOT stop you from buying a home in the future. I know this because I have been in the real estate and mortgage business for that last 13 years and I’ve seen many people came back after a foreclosure. I have also structured many home purchase loans for people with a previous foreclosure. Most of those loans have been underwritten through FHA (Federal Housing Administration) lenders offering excellent rates and programs- some with just 3% down payments needed by the borrower. I should note that lenders who lend to borrowers with a former foreclosure are very picky, they view this loan as a second chance and they will probably shoot it down if they see anything late at all on the credit report, or even a bounced check. So if you’re trying to purchase a home after a foreclosure, your credit must be spotless. If you want more solid, real world facts regarding your credit after your foreclosure, please see our website in the Resource section of this article -IT MAY JUST SAVE YOUR HOME FROM THE AUCTION BLOCK!

IF YOU DIG DEEP ENOUGH, it won’t take you long to realize that you can probably STOP or STALL your foreclosure by yourself. You don’t need to pay a total stranger thousands of dollars and hope they will do the job for you – I know I wouldn’t.

For more straight, no BS, ethical advice on saving your home without going broke, please visit our web site.

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