What Are The Ramifications Of Foreclosure ?
A foreclosure process means the lender who loaned the amount to the homeowner to buy a house is seizing the house and putting it on sale or auction in order to recover the lent money. The reason a mortgage company does this is because the borrower has defaulted the payments. If a borrower has defaulted on the payments for more than sixty consecutive days, then the lender has the right to foreclose a property.
However, foreclosure is a court process and it takes a minimum of three months for the pre foreclosure period to complete. After which the date for auctioning the house is determined and the house is put on the market. The entire process of foreclosure can take anything from four months to 12 months depending on the State of residence. Some states have a faster procedure for foreclosures.
However, a foreclosure is mainly caused due to delinquency and it can be quite damaging for the person who is faced with a foreclosure. One of the direct ramifications of the process is its effects on the credit report. A foreclosed property and the delinquencies can show on the credit report for nearly eight years. This means the person cannot apply for a loan for the next eight years even if they financially secure. Most lenders will see their profile as high risk. Even if lenders agree to give a loan, it would be at a very high rate of interest. The credit report will not only affect the home loan category, but everything like credit cards to auto loans or any other borrowing.
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