What Are The Consequences of Foreclosure?
Hey guys, Carter here with CB Home Solutions, and in today’s video, I’m going to be talking about what are the consequences of foreclosure in Appleton, Wisconsin, or anywhere in the Fox Valley. The consequences of foreclosure, a lot of times, people aren’t aware of what they might be facing when they’re late on their mortgage payments, they’re delinquent on their payments, and what might happen if they quit paying altogether on their house and foreclose on their house in Appleton. In this video, I’m going to go over that.
What Happens to My Credit Score After Foreclosure
The number one thing you need to be aware of is you are going to take a drastic hit on your credit score for the next probably three years, at least. Three to five years is more realistic, and it’s going to take consistent payments on your credit cards, on your car payments, everything like that, to increase that score over the next three years at a minimum. That’s the number one thing. Your credit score will probably drop 200, 250 points without a doubt. You’re not going to be able to secure any sort of financing. Nowadays, most landlords check your credit score, as well. So they’re going to see that you have a low credit score, a foreclosure on your record. It’s not going to look good for you. That’s one of the consequences of foreclosure.
Are you going to Try Renting a House After Foreclosure
Leading into the second, like I said, renting a house or renting a place might be extremely difficult. You might get lucky if the landlord doesn’t check your credit report or they don’t check your credit history, and then you’ll scoop by and do it that way, but now, most of days, if there is a property manager involved, they’re going to see the foreclosure on your record. What does that tell them? That tells them you couldn’t make your house payment, so why are you able to make the rent payment? Something, of course, could have happened financially, medically, anything like that, but, of course, they’re looking at it from a black and white perspective, and it’s more of a risk as a tenant. That’s consequence number two of foreclosure.
Number three is the ability to purchase a house again. In time, you will be able to purchase a house again after foreclosure. However, your interest rates are going to be higher. You’re deemed as a high-risk homeowner or home buyer by the lending institutions and everything like that. So your interest rates are higher. You’re not going to get as great a terms because you do have that foreclosure on your record, and there’s really nothing you could do about it other than wait and, hopefully after time, it’ll go away ,and then you can continue on and move forward, but that’s another thing you need to take into consideration. What does your life look like over the next two to five years? Are you going to want to buy a new vehicle? Are you going to want to buy a new house, move somewhere else? These are things you need to take into consideration when facing foreclosure, and if you can do something to avoid foreclosure, that might be most beneficial to you. To continue moving forward, that was number three, consequence umber three.
Consequence number four is going to be the “possible”, and I quote, “possible” tax issue when it comes to the bank for giving amount of debt owed because when you signed your mortgage statement, when you were purchasing your house, you said that, “I am getting a mortgage for $100,000. I am going to repay this $100,000 in full. Otherwise, the bank, or if I quit paying on the mortgage, the bank or the lending institution, I should say, can foreclose on me.” So now what the bank or lending institution can do, since you quit paying on your loan, if they sell, say you’ve got the loan for $100,000 and they sell it for 50,000, well, that $50,000 difference, although this is not too common, but that $50,000 difference could be put on your tax record as income because you didn’t pay them the $50,000 like you said you would, and now they forgave that debt, but, really, you have to claim it as income on your tax returns, and now you’re going to be taxed on that $50,000 gain, which is a significant amount of money, and then that leads you into trouble with the IRS and the tax institutions. That’s another consequence of foreclosure.
I’m just making this video so you guys are well informed, you know what you might be facing when foreclosure is in, I guess, grasp or when you’re close to foreclosure on your Appleton house. Here at CB Home Solutions, we have ways of helping you avoid foreclosure, whether it’s through a short sale or buying the property outright from you for cash. We buy houses throughout the Appleton area, and we would love to help you out, if at all possible. Feel free to contact us, fill out the form below on this page, or give us a call on our office line. I look forward to talking to you, and I hope you enjoyed this video.
