If you are faced with being in a foreclosure sale, you need to understand the best way to protect you and your family moving forward.
While a foreclosure is never a good thing, it isn’t the end of your financial world. Here is what sellers need to know about foreclosure effects in Salt Lake City to properly plan for future real estate ownership.
What Sellers Need To Know About Foreclosure Effects In Salt Lake City
Ability to Collect Sale Proceeds
When the bank forecloses on a property, most homeowners are often far removed from the process. The bank has taken over on the property because the owner hasn’t made payments. What many homeowners don’t always understand is that there is still an opportunity to get some cash out of the home
Banks are not in the business of making money on properties through buying and selling like a real estate investor. The bank seeks to regain its investment of the mortgage amount. If the foreclosed property has any surplus above what is owed on any lien balances, the extra will go to the previous owner in most states.
This is an important thing to remember to maintain the property as much as possible. All most all foreclosures are purchased with major repairs because former borrowers take out their frustrations and anger out on the house that is being seized. Keeping the property in pristine condition can yield higher sales and thus money back to the former owner as small consolation.
Credit Effects Over Time
Foreclosure hits your credit significantly. Also a thing to consider is the late payments or non-payments on the mortgage, when the bank takes the property this can drop credit scores two hundred or more FICO points.
The foreclosure itself remains on credit scores for seven years, the same as a bankruptcy. Rebuilding credit can happen immediately with good payment history on credit card and auto loans. Most mortgage lenders will not consider a loan to someone with a foreclosure for at least three years from the date of the foreclosure settlement (selling date).
Depending on the circumstances behind the foreclosure, some lenders will consider another mortgage sooner, but not before two years of the settlement date. Considered hardships included a loss of job or severe family illness or death. These need to be well documented and the circumstances leading to the foreclosure must be rectified prior to getting approval for a new loan.
Potential to Getting Home Back
There is a way in which a homeowner is able to get their home even after the foreclosure sale. This is called a redemption and is available for homes seized through a judicial foreclosure.
When the home becomes eligible for redemption, the previous owner has a year to complete the redemption. The redemption requires paying the new owner for the total balance of the previous mortgage and remunerate the new owner for any repairs and upkeep.
While a foreclosure is not a fun experience, your not alone and it isn’t the end of the world. Remember there are ways to possibly buy another home. In most cases, with smart credit repair, buying another home can happen much sooner than many foreclosure participants expect.