Top 4 Misconceptions About Foreclosure

Hundreds of thousands of homeowners end up in foreclosure each year and many times their actions are dictated by misconceptions about how the process works. Word of mouth and Google searches are unlikely to help you understand the realities of a Florida foreclosure proceeding. The common myths and misconceptions perpetuated by non-professional resources can cause missteps and poor outcomes. Consider these often-misunderstood foreclosure issues.

Foreclosures Happen Quickly

When a delinquent borrower receives a foreclosure notice, the immediate reaction is to pack up and move out. It’s important to not react hastily.

The lender must go through the legal process and that may give you time to bring the account current. In some cases, foreclosure can take upwards of 200 days to resolve. Contesting the foreclosure may take even longer, depending on the court’s schedule. It’s important to remain calm, get sound legal advice and make the best use of the time available. Call an experienced foreclosure and get a consultation and case evaluation.

Banks Want To Take Your Home

Lenders and their attorneys tend to put pressure on delinquent accounts and that sometimes translates into a belief that they want to seize the property. Nothing could be further from the truth. Lenders simply want accounts to be current so that they can remain profitable. Going through a foreclosure process can be costly and time consuming for all parties involved.

The other factor that leads many lenders to negotiate and avoid the foreclosure process is financial uncertainty. Taking over a property means the institutional will be tasked with bringing it to market and selling it. It could fall below the principal owed on the mortgage. That means the lender could be looking at a loss. Working with an experienced foreclosure attorney can open channels with lenders and avoid foreclosure proceedings.

Your Financial Responsibility Ends When The Property Sells

It seems logical that after suffering such a devastating financial hit that you would be free and clear once the lender sells your home. Unfortunately, you could be left owing money.

When a home sale does not cover the amount you owed the lender, many banks look for creative ways to recoup their losses. One of these methods is to seek a “deficiency judgment.”

Say, for example, that you owe $200,000 and the sale garners only $100,000. The lender could file a lawsuit asking for the other $100,000. To make matters even worse, the lawsuit could ask for legal fees and interest.

You Won’t Be Able To Buy Another Home After A Foreclosure

A foreclosure will significantly impact your credit report and rating. That, in turn, will create certain challenges when seeking another mortgage. It is true that there can be a lengthy waiting period following a foreclosure before you can buy another house. However, such mandatory waiting periods may be of little consequence. That’s because you will need the time to rebuild your credit anyway.

  • Put that time to work and rebuild your financial portfolio. Utilize steps to ramp up your credit score such as paying bills on time, getting a credit card and making multiple monthly payments. Demonstrate steady bank deposits and other things that positively impact credit reports. Plan to start a home search at about the three-year mark with an understanding about how mortgage lending works.
  • FICO Scores: Developed by the Fair Isaac Corporation, this credit measurement is a primary tool used to evaluate a borrower’s ability to repay a loan based on their history. FHA lenders tend to offer lower interest loans to those with scores in the high 500s and greater. Focus your post-foreclosure attention on your FICO rating.
  • Convention Lenders: The waiting period can run between 2-8 years with private lending institutions. Some may shorten the time period when larger down payments of 25 percent or larger are made. In real estate, they say that “cash is king.” Other options may be agreeing to higher interest rates.
  • Fannie or Freddie: If you can demonstrate in writing the foreclosure was caused by extenuating circumstances, you may be able to qualify for one of these highly sought after loans after just three years.

Going through a foreclosure may mean that you rent for a few years. However, once you re-establish economic stability, you may be looking a color swatches and new kitchen cabinets.

Contact An Experienced Florida Foreclosure Attorney

If you are falling behind in your mortgage payments or have been served with any type of delinquency notice, it is imperative that you speak with an experienced attorney. The value of forceful, professional legal representation cannot be understated. At Yardley Law, we defend the rights and interests of Floridians in foreclosure matters.

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