Foreclosure proceedings can be a slow and daunting process, but there are opportunities to take control and change the course of your future. While facing foreclosure in Massachusetts may seem inevitable, it is entirely preventable with the right actions and information.
No matter what led to this situation, homeowners who proactively address the issue can have the most influence on their outcome. Even as the lender’s notices start to come in, there is still room to engage with the lender and explore possible solutions together.
Choosing to ignore the problem and let the foreclosure process unfold will only make the journey ahead more challenging. In the following sections, we will delve into the five ways foreclosure on your Massachusetts property can have lasting repercussions on your financial future.
Costly
One of the ways the foreclosure of your Massachusetts house will impact you is the expense; your attorney will charge thousands, not to mention any fees that accumulate on the mortgage loan or from the process of foreclosure itself, which can be substantial as well. Attorney fees alone can range from a few hundred to several thousand dollars, depending on the complexity of your case and the fee structure used by the attorney. Additionally, during the foreclosure process, you may incur various other fees, such as late payment fees, inspection fees, and costs associated with property maintenance.
From your personal finance perspective, foreclosure can have a long-lasting impact on your financial future. A foreclosure remains on your credit report for seven years, significantly lowering your credit score and making it more challenging to secure loans, credit cards, or even rental housing in the future. The financial strain can extend beyond immediate costs and hinder your ability to rebuild your financial stability.
Allowing your home to fall into foreclosure is costly not only to you as the homeowner but also to the lender, who must absorb the loss of the unpaid loan balance, and to the local government, which may see decreased property tax revenue. Additionally, foreclosures can negatively affect local property values, impacting other homeowners in your community. This ripple effect underscores the extensive financial consequences of foreclosure on all parties involved.
Lose Equity
Another way the foreclosure of your Massachusetts house will impact you in the future is by the loss of equity. As homeowners pay down their mortgage balance, the difference in the amount owed and the home’s current market value is known as equity. During the foreclosure process, the accumulation of fees and costs, such as late fees, attorney fees, and property maintenance costs, can significantly eat into the equity you’ve built over the years.
Lenders typically aim to recover their losses quickly, often opting for the lowest appraisal value when selling the foreclosed property. This practice further depletes any remaining equity you might have had. In some cases, the sale of the property might not cover the total debt owed, leaving the homeowner with a deficiency judgment, which is the remaining balance after the foreclosure sale.
Additionally, MA law allows for situations where the local government can foreclose on a property for unpaid taxes and keep the profit from the sale, exacerbating the loss of equity for homeowners. This loss of equity can have long-term financial repercussions, making it exponentially more difficult to recover and rebuild your finances.
Future Credit
One of the most immediate impacts of the foreclosure of your Massachusetts house is the effect on your credit. While it won’t last forever, your foreclosure will be on your credit report for seven years per the IRS. This will likely lower your credit score significantly, making it more challenging to acquire any new credit during that timeframe. Although it is not impossible to successfully get new credit with a foreclosure on your record, you will likely face much higher interest rates, which obviously increases the borrowing cost and making life in general more expensive as a consequence.
Additionally, a foreclosure can impact other areas of your financial life, such as your ability to secure rental housing or even employment, as some employers check credit reports as part of their hiring process. There are steps you can take to rebuild your credit over time though. Consistently paying your bills on time, reducing or wiping out any outstanding debt, and responsibly using any credit cards can help improve your creditworthiness. Gradually, as you consistently work towards rebuilding your credit, you will regain control of your financial future and improve your overall financial health.
Future Homeownership
Qualifying for a mortgage will be difficult, there’s no getting around it. Under several government programs, it will be impossible for the next seven years though an exception would be if you qualify for VA loans, the period may be as short as two years following the foreclosure of your Massachusetts house. There are, however, some extenuating circumstances, like illness, divorce, or job loss, that will allow these lenders to work with you, so don’t cash it in and put your head in the sand again. Reach out and take charge of your future.
Future Employment
As more employers run credit checks in the attempt to find the most productive workers, the foreclosure of your Massachusetts house could impact your future employment potential. If you are in this situation, concentrating on credit repair will work in your favor. Although it doesn’t create a barrier for all jobs, your hire ability has a greater weight if the job requires you to handle money or customers’ financial data.
Gaeta Properties is here to help. Discuss the impending foreclosure of your Massachusetts house with the direct buyers at Gaeta Properties without any obligations. The experienced pros at Gaeta Properties want to help you end your foreclosure nightmare today. Call Gaeta Properties at (781) 258-6976 or send us a message to learn more.