Your Life after Foreclosure

Nov 25

Your Life after Foreclosure

If you, like millions of other Americans, are currently in some stage of the foreclosure process, you’re probably wondering what you can expect from life after foreclosure. The bad news is that losing a home to the bank will almost certainly have a negative impact on your credit – the good news, though, is that the current foreclosure glut means that mortgage foreclosure might not be quite as bad as it used to be.

What to Expect from Credit, Jobs, Cars and More

So which areas of your life might be affected by foreclosure action? According to a recent posting from WalletPop.com, a lot.

Your credit: As with a bankruptcy filing, a mortgage foreclosure will remain on your credit report for seven years – but the overall impact it has on your score and the way creditors view you should decrease with time. Because you likely won’t be able to open any new credit cards in the months and years directly following your foreclosure, it’s a good idea to keep up with payments on whatever cards you have now. Credit cards can play a central role in helping you rebuild your credit and thus qualifying for loans in the future.
Your career: Though some states have outlawed pre-hiring credit checks, many states still permit it, and plenty of employers take a peek at applicants’ credit histories as part of the screening process. If you’re looking for work, it’s important to be realistic and understand that your foreclosure might prevent you from getting jobs in economic fields.
Future purchases and loans: As mentioned above, a mortgage foreclosure will ding your credit rating in a pretty serious way, so you shouldn’t expect to qualify for a car loan or a new mortgage for a while. But that doesn’t mean you’ll be stranded on an island without any options for moving forward. The WalletPop.com post mentions one option called a “lease purchase,” wherein a person can agree to make regular rental payments to a landlord and decide, at some future point, to put those payments toward the purchase of the house.

On the Bright Side: Greater Understanding

The bright spot in all this foreclosure gloom is that, because so many Americans are currently struggling with foreclosure-related problems, more people are aware of the sorts of extenuating circumstances (like death, divorce, serious illness or injury, job loss, etc.) that can lead otherwise responsible financially individuals into mortgage foreclosure.

So, suggests the post mentioned above, don’t underestimate the power of explaining your situation to potential lenders or sellers. And, of course, don’t ever give up on rebuilding and maintaining your credit to demonstrate that you’re a good credit risk.

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