As the pressure on financial markets increases, consumers are feeling the global economic crunch. Of late the numbers of US home foreclosures have increased dramatically and have caused tremendous damage to a consumer’s credit history. Through the course of this article we will look at the impact a foreclosure can have on your credit history and the possible solutions or alternatives to a foreclosed home.

Home Foreclosure Help: Define Foreclosure

Before we start off, it is important to define foreclosure. If a consumer is behind on his/her mortgage payments and has not made any attempt at resolving the situation or catching up on the payments, you can be rest assured that the financial institution will be sending you a foreclosures USA statement pretty soon. In the event of a foreclosure, the mortgage company with which you have your home loan, steps in and takes over your property and sells it at the sheriff’s auction, similar to the process discussed for timeshare foreclosures. This event then becomes a matter of public record and can stay on your credit report for up to 7 years, therefore causing a negative mark on your credit history.

Foreclosures in USA: Statistics

Here are some statistics on US home foreclosures:

• 1 out of 300 homes is likely to be a foreclosed home
• Nearly 250,000 families every 3 months enter into a foreclosure.
• Owing to the falling market conditions, certain homeowners who opted for variable interest rates find that their homes are no longer growing in value and at the same time their mortgage adjusts higher and as a result of this refinancing is no longer an option.
• Nearly 6 out of 10 mortgage owners wished that they had understood the terms of their mortgages better. At the same time another 6 out of 10 mortgage owners are unaware of the services their mortgage companies can offer them in the even that the are struggling with their home loan repayments.

Home Foreclosure Help: Impact On Credit Report

A foreclosure is probably one of the most adverse things that can happen to your credit report and you will definitely need home foreclosure help if you are in a similar situation. Owing to the fact that USA foreclosures are a matter of public record, it can negatively impact your credit by nearly 130-180 points. A foreclosed home can stay on your credit history for a period of as long as 7 years. Even after 7 years credit providers can check the public records and might find the foreclosed home listing against your name, in which case obtaining credit will become extremely difficult. Even after years, when you have a god job and are on top of your bills, a previously foreclosed home listing on your credit report can come back to haunt you.

Foreclosures In USA V Bankruptcy

While bankruptcy can be the worst thing on your credit report, foreclosures in USA are not far behind. While bankruptcies can be on your credit report for a period of over 10 years, a foreclosure remains for a period of 7 years or more. Bankruptcy charges can negatively impact your credit history by nearly 230-280 points while a foreclosed home can have an impact of 130-180 points. It however must be noted that both bankruptcies and US home foreclosures are a matter of public record and are viewed extremely negatively by finance providers. It is in the best interest of consumers to avoid either of these situations as far as possible.

Home Foreclosure Help: Disadvantages

When seeking home foreclosure help, it is very important to understand the disadvantages of a home foreclosure. Some of the disadvantages of a foreclosure are listed below:

1. US home foreclosures can set your FICO score back by as much as 180 points.
2. Mortgage US home foreclosures are viewed extremely negatively by lenders and can make getting credit in the future very hard and very expensive.
3. A foreclosure usually stay on your credit history for as long as 7 years or more.

Home Foreclosure Help: Avoid Foreclosures In USA

If you are behind on your mortgage loan payments and feel that a foreclosure in USA is imminent, try some of these alternatives instead to avoid irreparably damaging your credit history:

1. Speak to your mortgage lender and temporarily reduce your mortgage repayments.
2. Capitalize the unpaid amount and increase your existing payments slightly to cover the deficit.
3. Most mortgage lenders allow their customers who are facing home loan repayment difficulties to enter into payment plans to cover the deficit.

It is always a good idea to consider all your options prior to getting a foreclosure. Many consumers are unaware about the help their mortgage companies can offer them. Seek legal and professional advice before making decisions regarding a foreclosure. It is absolutely essential that consumers completely understand their situation before making any decision because consumers must remember that a  foreclosed home can cause irreparable damage to your credit history.

References:

1. Foreclosure Statistics – Federal Deposit Insurance Corporation
2. Facing Foreclosure? 9 Options – Money Central, MSN