Homeowners who do not make their monthly mortgage payments over a period of time, run the risk of losing their homes. Foreclosure can also occur if a homeowner has broken any of the terms in the mortgage contract. When these types of situations occur, the financial institution that has provided the mortgage loan may decide to repossess the property.
Not only does a foreclosure cause substantial damage to a person’s credit report, it can have many other devastating effects as well. According to Bankrate.com, a negative credit score can make it difficult for people to apply for financial loans and credit cards in the future. It can also be hard to qualify for another home. After a foreclosure is finalized, the homeowners lose their home along with any equity that they had in it. In some cases, people may still owe a balance on the home and could experience an increase in taxes.
People who are going through a foreclosure often feel hopeless. However, they may have several options that could stop foreclosure depending on the specific circumstances of their case, according to Fannie Mae. If they meet the qualifications, homeowners could avoid a foreclosure by putting their home up for short sale, or finding a buyer to purchase the home. They may be able to apply for mortgage release, which is where the title of the home is transferred back to the lender. In any case, homeowners should speak with their mortgage company as soon as possible in order to discuss their options, and possibly save their home from foreclosure.