In the event of a borrower defaulting on their mortgage payments, the lender may initiate foreclosure proceedings, which could lead to the loss of the property. It is crucial to take immediate action by seeking help and exploring all available options to prevent severe consequences.
Here are 5 Ways the Foreclosure of your Augusta House will Impact You
But before we do that, let’s first discuss why Homes go into Foreclosure.
Why Do Homes Go into Foreclosure?
When a person buys a home, the bank that lends the money for it undertakes a rigorous process to ensure the borrower can afford to pay. About 70% of mortgages last for 30 years, and unforeseen circumstances can cause someone’s financial situation to change dramatically.
Many homeowners found that out during the COVID-19 pandemic. Loss of a job or reduction in income led more homeowners to fall three months or more behind on mortgage payments than had since 2010, the height of the Great Recession. By June 2021, 15 months into the pandemic, 1.9 million Americans were still three months or more behind on mortgage payments. But it doesn’t take a global pandemic to change financial circumstances dramatically.
Significant reasons for foreclosures are:
- Job loss or reduction in income
- Debt, particularly credit card debt
- Medical emergency or illness resulting in a lot of medical debt
- Divorce, or death of a spouse or partner who contributed income
- An unexpectedly big expense
- Moving without being able to sell the home
- Natural disaster
As circumstances have led up to the point of foreclosure, you likely already had several late or missing payments on your history, and you have already begun to feel the ill effects of a negative credit score. Sleepless nights may become familiar as the communications from your lender have increased, leading up to the final point of foreclosure. Our imaginations are much worse than reality, so take heart, others have survived foreclosure, and you can as well by knowing what you face and that there is hope and a light at the end of the tunnel. It can set your mind at ease to take a realistic assessment. No matter how you have ended up in this situation, we will discuss five ways the foreclosure of your Augusta house will impact you.
Personal Credit will be affected
Lenders are hesitant to work with borrowers who have a history of foreclosure. The financial penalties of foreclosure will affect your credit score for seven years, resulting in either high-interest rates or denial of credit. This long-term effect makes life more expensive, as credit is necessary for survival. A foreclosure will have a greater impact on your credit score the higher it is. However, making timely payments for three years can clear your credit history of foreclosure.
Fees and Deficiency Payments will accumulate
The financial blows from the court fees and any deficiency from the foreclosure of your Augusta house will continue to linger until the debt is satisfied. When you go through the foreclosure process in court, you are responsible for paying court fees. Additionally, you will still owe the difference between the amount realized for the property against any remaining debt to the mortgage lender, known as the deficiency.
Equity will decrease because of fees and penalties
Sold at an auction, lenders typically accept lower appraisal values and bids for foreclosures. You likely owe penalties in addition to the overdue payments, which will all come from the proceeds. Whatever equity you may have gained over the years will likely be gobbled up by fees, penalties, and a low sales price. The foreclosure sale tosses everything you have built right out the window. The loss of the home and your equity because of foreclosure of your Augusta house will impact you in retirement by depleting what could have been a significant contribution to your golden nest egg.
When you are already experiencing a change in your life from whatever has caused the foreclosure, the foreclosure becomes a looming nightmare. When emotionally invested, it is difficult to remember that it is strictly business for everyone else involved. Losing your home and the equity you have built, facing court, and all of the expenses that come with it can have highly detrimental mental effects on yourself and your family. The stress of the unknown date the bank will evict you and where you will go is regrettably one of the most brutal ways the foreclosure of your Augusta house will impact you.
Standard of Living will be affected for years
Concerns about the standard of life you now face with your foreclosure history following you for years are valid. Because of foreclosure, life has become even more costly. However, there are limitations on those with a foreclosure in the past. The red flag of a foreclosure on applications requiring you to experience a credit history search can begin a downward spiral in areas of your life, such as the available housing and higher-paying job opportunities. The job you accept and the area you live in can considerably affect the enjoyment of your day-to-day life and is another way the foreclosure of your Augusta house will impact you.
HAS Holdings LLC understands the impact of foreclosure on your Augusta home. Don’t wait until it’s too late. Let HAS Holdings LLC solve your problems and ask any questions without obligation. Contact us now at (706) 873-1213 or send a message!