If you’re facing foreclosure, you’re not alone. Every three months, around 250,000 hardworking American families enter the confusing foreclosure process. If you’re behind on your mortgage payments and foreclosure is imminent, the horror stories of friends and family members might be more frightening than the prospect of losing your home.
Most of the information you’ve been told about foreclosure in the past isn’t true, and these misconceptions can often make the process even more stressful. Here are a few of the most common myths associated with foreclosure.
A Foreclosure Will Prevent Me from Buying a Home in the Future
One of the most common myths associated with foreclosure is the idea that once you’ve gone through the process, you will never be able to purchase a home in the future. Unfortunately, foreclosure will dramatically impact your credit score, which in turn will make it more difficult to secure a loan.
However, before you lose hope, it’s important to note that there are ways to raise your credit score after a foreclosure, which will help make you more attractive to potential lenders. After your foreclosure is complete, there is a mandatory three-year waiting period before you can purchase another home.
During this period, it is important to build your credit. The best ways to do this is to pay all your bills on time, avoid incurring excessive debt and find ways to increase your income. This will lower your debt to income ratio, which will help increase your credit score.
The Foreclosure Process is Fast
Many homeowners mistakenly believe that when they are notified by the bank of the impending foreclosure, they must pack up and leave their home immediately. However, depending upon the state, it can take several weeks or months for the entire process to be completed.
There are two different types of foreclosures: judicial and non-judicial. A judicial foreclosure involves the court system. In a non-judicial foreclosure, the bank does not involve the court system and instead deals with the homeowner directly.
If you are served with a foreclosure notice, it is important to contact an attorney immediately. They can help you understand your options, depending on where you live. For example, in Alabama, there are special protections that allow homeowners to slow down the foreclosure process.
My Lender’s First Choice Is Foreclosure
Another common myth is the idea that a lender would rather foreclose on your home, rather than find a way to help you keep your home. In reality, the foreclosure process is very time-consuming and costly for your lender, as well.
If you fall behind on your mortgage payments, contact your lender immediately. In many cases, your lender will help you find a way to keep your home, such as refinancing the loan or creating a payment program.
Unfortunately, there are instances when your lender will be unwilling to help. When this occurs, do not take on the foreclosure process on your own and instead, contact an attorney.
My Obligation Is Over When the House Is Sold
There is a foreclosure law found in several states that are called anti-deficiency laws. Basically, this means that if your home is sold for less than what you owe on your mortgage, you as the homeowner are not legally obligated to pay the difference. Unfortunately, these laws do not exist in Alabama, which means you are obligated to cover the deficiency, which could be several thousands of dollars.
Once again, if you are facing foreclosure, it is critical to contact an attorney. Your lawyer can help you understand the deficiency laws in your state, ways you can avoid foreclosure and keep your home.
Foreclosure is a confusing and frightening process. If you are entering the foreclosure process, don’t hesitate to contact Frances H. Hollinger, Attorney at Law.