The foreclosure process moves at a sluggish pace, leaving plenty of time to change course and secure a better future. Unfortunately, while foreclosure can be completely averted, many people still face long-term setbacks because they lacked crucial information about its impact and failed to take the necessary steps to stop it from happening.
No matter the changes in circumstances that lead to the situation, homeowners who act early to avoid losing their property will have greater control over their future. Even as letters from the lender start arriving, there is still an opportunity to contact them and explore a mutually agreeable resolution.
For homeowners who choose to ignore the situation and allow the foreclosure process to unfold, the path forward will be challenging. In this article, we’ll explore five ways a foreclosure on your California home could affect your future.
Costly
A major consequence of the foreclosure on your California home is the financial burden. Legal fees alone can run into the thousands, and that’s not including the mounting costs associated with your mortgage or the foreclosure process itself, which can also be significant. As a result, letting your home go into foreclosure not only comes at a high price for you as the homeowner but also impacts the lender, local government, and neighboring property owners.
Lose Equity
Another significant effect of the foreclosure on your California home is the erosion of your equity. Equity represents the difference between your outstanding mortgage balance and the home’s market value, which grows as you make payments. However, as foreclosure fees and costs accumulate, the equity you’ve worked hard to build over time will gradually diminish. Furthermore, lenders often rely on the lowest appraisal value, further reducing any remaining equity you may have in the property.
Future Credit
A foreclosure on your California home will have an immediate and lasting impact on your credit score. Although it won’t be permanent, the foreclosure will remain on your credit report for seven years. While obtaining credit during this time isn’t impossible, you can expect significantly higher interest rates as a result, which will add to your financial burdens. However, as you focus on restoring your credit, you can gradually improve your creditworthiness and regain control of your financial situation.
Future Homeownership
Securing a mortgage after foreclosure will become challenging. Many government-backed programs will deny eligibility for up to seven years, although VA loans may offer an exception, reducing the waiting period to as little as two years after your California home is foreclosed. In certain cases, such as illness, divorce, or job loss, lenders may be willing to reconsider and offer some flexibility. Instead of ignoring the issue, take action now and start working toward reclaiming control over your future.
Future Employment
With more employers conducting credit checks to identify reliable employees, the foreclosure of your California home could negatively affect your future job prospects. In roles involving money management or handling customers’ financial information, your credit history becomes a significant factor in the hiring process. While not all positions will be out of reach, focusing on repairing your credit will boost your chances and improve your overall employability moving forward.
Matt Buys Houses is ready to assist you. Connect with the direct buyers at Matt Buys Houses to talk about the upcoming foreclosure of your California home, and there’s no obligation involved. The knowledgeable team at Matt Buys Houses aims to help you put an end to your foreclosure troubles right now. Reach out to Matt Buys Houses at 559-978-2241 or drop us a message for more information.