Foreclosures can create some major challenges in life that will affect you for many years to come. It’s important to deal with the situation head on and get ahead of it. When you learn the time frame and the different steps of foreclosure and compare that with what letters or other communication from your lender, this will determine how quickly you need to move to secure your exit strategy. If you ignore the pending legal action letters, that is no excuse in court. Don’t stick your head in the sand and allow the process to destroy all you have built by moving past the point of no return. Always remember that until the day the gavel comes down at the sheriff’s sale, you still own the property and can sell it up to that very day. Read on to learn 5 ways foreclosure will impact you in New Orleans.
Negative Credit Reports
If foreclosure is looming over you like a black cloud on a sunny day, don’t ignore the rain. A negative credit report due to a foreclosure can severely impact your ability to acquire new housing. A lower credit score will also often result in being denied consumer credit. If you are approved, the interest is typically astronomical, only adding to the financial issues you are already facing. Selling prior to being foreclosed is always the best option when it comes to preserving credit. You can get past some late payments on your credit report much quicker than the actual foreclosure itself. That is a BIG whammy.
Lost Equity
Equity is the difference between the current market value of your New Orleans home and what is owed to the lender holding the mortgage on your property. As one of the largest investments most of us will make, equity can build up literally into the hundreds of thousands over years, depending on the current trends in real estate. You naturally look forward to reaping the rewards of the equity in your home. This return on your investment will be impacted considerably should you go into foreclosure. If your lender has just begun to issue notices of non-payment, then they have not began the actual foreclosure process yet. Once that happens, things get more complicated. Back payments will continue to add but now you will also be facing with legal fees which will continue to go up as the process moves along. The foreclosure process is a lawsuit. The bank or mortgage company has to hire a law firm to file the suit, send all the notices, etc. Don’t forget about property taxes and insurance as well, as those two items will continue to impact the situation. If you can’t provide insurance coverage the lender will force place insurance which is always outrageously expensive. Don’t lose what equity you have left. You can avoid all of the negative impacts of foreclosure by selling your house prior to losing it.
Stress
Financial stress and strain is one of the worst things one can go through. The uncertainty of not knowing when you will have to leave your home can lead to sleepless nights and have negative emotional impacts. This can extend out into your work, friends, and even close personal relationships, causing additional strain. Not to mention the embarrassment of being denied housing opportunities due to the foreclosure. Being evicted can be a traumatic experience and not a memory anyone recalls fondly.
Deficiency Debt
Sometimes homes that go into foreclosure do not realize the full market value in New Orleans and this leaves what is known as a deficiency debt. You could still end up being responsible for the remainder of the debt, which is an additional burden on your already stretched resources, along with yet another negative impact on your financial history. If the bank chooses, they can go after a deficiency judgment which will need to be included in your tax return as income. Sometimes it can be offset by the loss you took on the house but that all depends. It’s important to consult with a tax professional in this case.
Future Housing Problems
Once you’ve gone through a foreclosure, guidelines in place prohibit you from the ability to get a mortgage through the Fannie Mae program for 7 years. When it comes to the mortgage industry, Fannie Mae is one of the largest mortgage lenders. Loans that are acquired through them provide homeowners several worthwhile benefits. The inability to avail yourself of this program could impact you by limiting the opportunities available to you in the New Orleans housing market, or any housing market for that matter. Once the foreclosure goes through it will go on the public records section of your credit report. It is not even something a credit repair company can get rid of. ANY home loan application and many rental applications will ask you directly if you have had a foreclosure within the last 7 years. If you have then it’s highly likely you will not get a loan and may have to put more deposit money down for a rental. It’s a huge impact and not something that should be taken lightly.
We encourage you not to give up on your desired outcome, whatever that may be, and for most people it is to not lose the house. Continue to fight and keep what you have fought and worked so hard so get. Borrowing money, loan modifications and perhaps getting another job to try and make up or modify the back payments and bring your loan current are all options that are available to you. But recognize that there may come a point when selling makes more sense than doing nothing if you have exhausted all other options. The things that are discussed in this article are serious business that will affect your life for years to come. If you have exhausted all other options and there is no path to recovery…sell It now! Quick action is called for when there is an impending foreclosure on your property. The simplest way to avoid all of the negative impacts foreclosure can bring to your life is to nip it in the bud and sell your New Orleans, Metairie, Kenner, Harvey, Gretna, Marrero home.