Only bankruptcy is more damaging to your credit than a foreclosure.
Nevertheless, there are times when a foreclosure can make sense to your household’s bottom line.
First, be aware:
• Even if you continue to pay your other bills, the foreclosure remains on your credit report for seven years. Bankruptcy’s black mark remains for 10 years.
• After a foreclosure, your credit score can drop 150 points or more, according to the leading credit scoring system (FICO) architect Fair Isaac Corp.
• After a foreclosure, any credit and insurance available to you will cost more and you could find it tough to rent a home, even get certain financial or security jobs.
• You also could face legal costs if the lender comes after you for the difference.
• In 2010, Fannie Mae implemented a policy that prohibits strategic defaulters (those who stop paying their mortgage, even if they can afford it, often to force the lender into a modification or other workout) from getting a new Fannie Mae-backed mortgage for seven years from the date of foreclosure.
With those caveats in mind, the Los Angeles, CA-based law firm of McFarlin LLP says saving money and gaining negotiating leverage with your lender for something short of a foreclosure could make sense.
The law firm offers the infographic below to provide more information.
Also see: “Infographic: Alternatives to foreclosures” for a longer list of your options.
Click on the McFarlin infographic to learn more about the causes, types, benefits of and alternatives to foreclosure, as well as other useful foreclosure information.
Source: McFarlin Law
See more infographics.