"What is foreclosure?"When you purchased your home, chances are you took out a home loan and your lender took a security interest in the property. In the event that you cannot make your mortgage payments, this security interest gives your lender the right to foreclose--auction off your house and keep the proceeds in order to recover its investment. And, if your property cannot be sold for what is owed, a deficiency judgment could be pursued against you. Both a foreclosure and a deficiency judgment could seriously affect your ability to qualify for credit in the future.
A foreclosure has considered to happen when your payments have gone 120 days late. Once you hit that mark, many lenders consider the home to be in foreclosure.
If you have been late in the past, many lenders will initiate foreclosure proceedings when you're 90 or even 60 days delinquent on your mortgage.
These foreclosure proceedings are sometimes referred to as preforeclosure and foreclosure is when the property is actually foreclosed on (sold or taken).
With a foreclosure on your credit, not only will it seriously affect your credit score, but it will also affect your ability to buy another home, to obtain a car loan, and to qualify for any other type of financing out there. Therefore, if you begin to fall behind on your mortgage weigh your options heavily and seek alternative to having your home foreclosed on. Some ideas are to see if you can get some help from a parent or family member, sell your home, borrow from a retirement or other investment account, or maybe pick up a second job to help get yourself caught back up on your mortgage payments.
