How a Foreclosure Affects Your Mortgage
If we’re being honest with ourselves, home buying and home ownership are stressful and at times confusing. If you’ve found yourself moving into the unfortunate stage of foreclosure, you’re probably wondering what the next step is. Understanding how a foreclosure affects your mortgage will help you get the answers you need to make a plan.
Wage Garnishment
Your wages may be garnished following a foreclosure. A mortgage company can also levy your bank account or place a lien on your possessions. It’s allowed to use the same collection techniques that creditors use. Whether any of this happens will depend on whether the earnings from the sale of the home will cover the remaining loan balance and costs.
Home’s Resale Value
There are different state deficiency laws regarding foreclosures. However, if your home sells for more than you owed at the time of the foreclosure, then you won’t be obligated to pay your lender any additional money once the process is done. The lender must apply your home’s sale price to the mortgage debt.
The Silver Lining
Foreclosure is hard, and it can really hit your credit score, among the other unfortunate aspects of such a process. However, there’s a silver lining for some people. It seems that the better your credit score was, the fewer points it’s likely to drop. Therefore, if your score was in a good range and on its way to excellent, you may lose fewer credit points. Also, it will take time, but you can rebuild your score.
Additionally, if you are or were in the military, lenders are much more lenient when it comes to VA loans. VA lenders tend to be more forgiving about poor credit, past bankruptcies, and foreclosures, so there may be hope for you to obtain a new property and loan by following their guidelines and requirements. Turn to Streamline Mortgage, the hard money lenders in Las Vegas, to learn more about your options and VA loan parameters.
A foreclosure affects a lot more than your mortgage. It’s a devastating occurrence, but it’s something that many people experience. In 2020 alone, just under ten thousand homes foreclosed. Knowing how a foreclosure affects your mortgage and the steps you need to take will help you get back to where you want to be sooner rather than later.