What are the Effects of Foreclosure?Foreclosure means more than just losing a home. It can haunt a person for years down the road. Other problems that may result from foreclosure include:
Loss of equity earned in your home. The value of your home may increase each year. In many cases the combination of the equity and the increased value of your home can translate into losing thousands of dollars.
Increased taxes. A lender who loses money from the sale of a foreclosed home must report the loss to the IRS. Subsequently, the IRS may require you to report the lender's loss as income on your next tax return and you may be required to pay taxes on it.
Inability to borrow money in the future. A foreclosure can destroy your credit profile almost overnight. This derogatory mark on your credit report will label you as a bad credit risk for at least 7 years. This can result in declined applications for credit, the inability to rent an apartment, limited employment opportunities, and a host of other implications that can follow you for a long time.
Lawsuits. The mortgage company can go after you for damages.
Loss of employment. Some employers require their employees to maintain good credit histories. Notification of a foreclosure may be grounds for dismissal or loss of a chance for advancement and better pay.
Loss of self-esteem and self-worth. Emotionally the stress of foreclosure can have serious effects on your well-being. The stress that foreclosure brings can lead to depression, feelings of worthlessness, lack of motivation, embarrassment around family and friends, and the list goes on.
In order to prevent foreclosure, it is strongly recommend to take action if your finances begin to appear unstable. The guidance of a loss mitigation counselor, for one, can steer a homeowner in the right direction with regards to saving property
" Understand, then Negotiate With Your Lender "
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