Mortgage Rate News

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Foreclosure definitely affects your credit score. Indeed, since it is such a huge loan, a form of credit, your mortgage can make a big dent in your credit score. If you lose your home to foreclosure, then you could see a drop of between 200 and 300 points. That is a huge ding — especially if your credit score was already struggling in the mid-600 range. Not only that, but a foreclosure will stay on your credit report for seven years.

In order to avoid having a foreclosure on a credit report, you might try to get your lender to agree to some other options, such as a deed lieu of foreclosure or a short sale. It is important to be careful in these instances, since there is still an impact to your credit score.

Deed in lieu of foreclosure

In this arrangement, you actually return the deed to the mortgage lender. You still lose the house — the lender owns it — but you are forgiven the balance of the mortgage. But when you negotiate this option, you will have to convince the mortgage lender not to report it as a foreclosure. Some lenders will report this as a foreclosure, and that will then impact your credit score. Even if your mortgage lender does not report the transaction as a foreclosure, if it has been preceded by months of late or missed payments, you will find that your credit score has been impacted by that.

Short sale

A short sale is when the lender agrees to let you sell the home for less than you owe on it. The difference is usually forgiven by the lender. Again, if you have late or missed payments as a result of falling behind, you can see damage to your credit score.

It is important to note that after any of these transactions, it will take two or three years before you can buy a home again.

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For the third month in a row, foreclosures have declined. October saw a decline in home owners ready to lose their homes. Thanks to programs aimed at helping home owners refinance or modify their loans, foreclosures have been slowing. However, as BloggingStocks reports, there are still concerns for the future:

The number of homeowners on the brink of losing their homes continued to decline in October for the third straight month, as foreclosure prevention programs helped more borrowers. But foreclosure filings are still up 19% from a year ago, reaching more than 332,000 households, or one in every 385 homes. Rising unemployment could threaten the stabilizing trend.

Programs to help at-risk home owners aren’t much good if these home owners do not have jobs that can provide income. Therefore the continued weakness in the labor market is providing some concern. Advance unemployment data for last week is offering some hope, though. Jobless claims appear to have dropped by quite a bit, bringing the number down to around 502,000. This is the lowest it’s been for months.

However, the fact remains that jobs are still being lost.  They are being lost at a slower rate, but they are still being lost nonetheless. A dramatic reduction in the pace of job losses will be needed in order to provide a solid basis for economic recovery and quiet fears of continued destabilization in other parts of the economy.

At any rate, there is optimism that slowing unemployment will help matters in the housing market, also leading to slowing foreclosures. And, as more people take advantage of government programs meant to help them afford their homes, there is a strong likelihood that they will not have to be subject to foreclosure. And that in turn may help keep the housing market from sliding back into another dip next year.

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When it comes to buying a home, it is important to consider your options. And it is important to be aware of some of the main issues associated with buying a home. This is especially true if you want to purchase a home that is in foreclosure. Buying a foreclosure can be a tricky proposition, and you need to be careful. There are definite advantages and definite bargains to be made. But if you aren’t careful, you could get way more than you bargained for. And not in a good way.

Real Estate Pro Articles offers these helpful guidelines to use when buying a foreclosure:

1. Finance: Real estate calls for huge investments, so check the availability of finances. See how much you have and how much will you need approximately. Ascertaining that, get yourself pre-qualified for securing a loan.
2. Look for available foreclosure homes: Search carefully for foreclosure listings available on various websites, real estate magazines and advertisements in newspapers. Contacting banks to get information is also a good idea, as banks are the most common lenders who sell foreclosed properties.
3. Know what you want: Be clear about what kind of a property you are looking for. This will help in choosing a property among the various available properties which matches your requirements the best. Think on parameters like, size, expected rate, locality, amenities, etc.
4. Knowledge about foreclosure laws: Buying foreclosed properties has its own intricacies, so it is very essential that you gain proper knowledge as to the laws and procedures governing foreclosures in your State.
5. Consulting a realtor: If you are not sure about how to go about making the investment in foreclosure homes, then consulting a realtor who has the requisite experience in dealing with foreclosed properties is a good idea as he will guide you and help in getting the right kind of property.
6. Thorough inspection: Examine the property that you wish to buy very carefully as there will be repairs that may be needed and for which you will have to pay. This will help you to negotiate better.
7. Closing the deal: Once you have made the offer and the seller accepts it, then on making the payment and finalizing the deal, carefully ascertain that all legal compliances are done with, necessary documents are in order and that you get a clear title to the property. Seek assistance from attorney if you feel the need.

It is still a good time to buy a home. Mortgage rates are low, and so are home prices. And if you are interested in something that is an uncommon deal, you might consider buying a foreclosure. Just make sure you are careful, and you know what you are getting into.