When the house goes into foreclosure, this goes on your credit report and stays there for seven year. Unfortunately this means that your credit rating will drop, so that interest rates for credit cards and other loans you may get will be higher.
Finding a Place to Live
• If your house goes into foreclosure, you may find it difficult to find another place to live. Some landlords may consider your foreclosure a sign that you might not pay for your rent as well and may require a larger deposit than usual to cover what they see as a perceived risk.
Future Down Payments
• If you go into foreclosure, you may find that when you apply for another mortgage in the future, you not only will be faced with higher interest rates but you may be required to put a larger percentage down as a down payment.
No New Mortgage for Several Years
• You cannot apply for another mortgage for three years after your house is foreclosed upon; Fannie Mae can require a waiting period of up to seven years for their mortgages, depending on your circumstances.
Getting a Job
• A foreclosure should not affect you when you apply for most jobs, unless the employer expects you to deal with money. Since your employer will want to know why your house went into foreclosure, you should be ready with an answer. Providing information about how the foreclosure has changed your personal money management can help.
• Unless you file for bankruptcy, you may be responsible for the taxes on the house that was foreclosed upon.
Foreclosed homes are usually in some form of disrepair. If the owners could not make their mortgage payments, it is likely that they could not afford to keep up with maintenance either. You may have to spend a lot of money to make the home livable, so factor in the cost of repairs when considering the purchase price.
Foreclosures often come with encumbrances such as judgments, liens and other attachments that you may have to pay to obtain the property. It is wise to conduct a title search or hire a title search company to research the property so you can make an informed decision prior to purchasing.
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