How Foreclosure will Affect You in Cincinnati, OH
Losing a home can be one of the most painful events in one’s life. Beyond the negative emotional impact which alone can be devastating, having a foreclosure will also affect your long-term financial well-being. If you’re facing foreclosure, there are things you should know.
Credit ScoreAccording to Equifax, foreclosure is second to bankruptcy in terms of the most damage that it does to a credit score. Experts estimate that a foreclosure will negatively affect your credit score by 200-300 points! If you have a credit score of 700, that could drop your score all the way down to 400, which is considered very low (credit scores range from 300-850) and could even make it difficult to get a car loan. Even if you were able to get a loan, the rate would be significantly higher and you could end up paying thousands of dollars more in loan payments than someone with a good credit score.
Buying Another HomeIf you’ve been through a foreclosure, you may have to wait up to seven years to get another conventional loan for a home. After foreclosure, the only option for most people is to rent, which means you will be paying someone else’s mortgage for them instead of paying your own for the next several years. Moreover, most landlords run credit checks on a new tenant, and having a low credit rating could even dissuade a person from renting a property to you.
Equity LossOne of the biggest advantages of owning a home is the equity that is gained. Every time you pay your mortgage payment, you increase the equity you have in the house. If you have a house worth $150,000 and you only owe $100,000, you have $50,000 of equity. However, if that same house is foreclosed on and the mortgage lender takes the house back from you, you could lose the entire $50,000 of equity that is in the house. Selling the house to keep the equity is always an option, although the traditional way of selling a house on the market will likely take longer than the foreclosure process.
If you are facing foreclosure, it’s not too late. Even if you are only days away from losing your home, there’s still hope. At Burnett Home Buyers, we pay cash for homes and can close in as little as 7 days.