4 Reasons Walking Away Before a Foreclosure Is Not a Good Option

What should you do if you find yourself with an underwater mortgage? That’s how many homeowners found themselves during the 2008 housing crisis. Many homeowners unfortunately did not know what to do or who to turn to for help. They lost their jobs, had high medical expenses, or denied help with their mortgage, such as a loan modification.

Some waited for a foreclosures NYC while others may have chosen to walk away from their homes before a foreclosure. Without the financial obligation, they could start over, right? No, it’s never a good option to walk away and here are four reasons why.

Your Credit Score
Your credit score will be gravely affected by foreclosures in NYC. There are options to take, such as talking to a short sale or a loan modification specialist. There are programs available offering homeowner’s assistance. Walking away will decrease your score and leave you with no justifiable answer if you are ever asked to explain.

It May Take a While to Be Eligible For Home Ownership
Many people are eligible to purchase another home in a few years after a foreclosure in NYC. But, you would be ineligible for a Fannie Mae mortgage until seven years later.

You Could Be Eligible For a Deficiency Judgment
A deficiency judgment is the difference of money earned from the sale of your foreclosed home and the amount of money owed on your foreclosed home. However, abandoning your home and the court process could add on court costs, attorney fees, and additional penalties.

You Could Have a Phantom Title on Your Hands
Some homeowners that have walked away before a foreclosure found out that the bank did not proceed with the foreclosure. The home was not auctioned and that means the owner is still responsible for the home.

They now have a phantom title, because the bank has no way to contact them. These homeowners are now responsible for taxes on the home, any repairs, graffiti cleaning, trash removal, and lawn care. Their wages and tax refunds could be garnished.

To prevent any of this from happening to yourself, just do not abandon your home. Homeowner assistance programs require a homeowner to live in their home. Talk with your lender or a professional realtor and foreclosure agency such as Premier Real Estate NYC.

Managing Your Credit Cards during a Foreclosure

You know that foreclosures NYC can damage your financial future. So if you are going through one now, here are a few things you can do to help yourself out.

Rent an Apartment
Before your credit score lowers, if you know you have to move, secure yourself an apartment. After a foreclosures NYC hits your credit report, landlords may be reluctant to rent to you. Secure an apartment, place your security deposit down, and set a move in date for three to six months out, if possible.

Create a Healthy Budget
Various financial burdens cause foreclosures NYC. One being a relaxed budget. So, it’s time to start creating a healthy budget now. Start tracking what you overspent the past few months and adjust that. It’s better to cut out a few things such as coffee or breakfast on the go, than not have a savings account.

Start Reducing Credit Card Debt
If you currently have high credit card debt, it’s time to start paying that down. You want to have a low debt-to-income ratio to ensure you can get a good mortgage rate in the future. It’s easier to work on this now than try to fix it once you have the opportunity to buy a home again.

Get an Emergency Credit Card
Get yourself an emergency credit card. This may come useful once you’ve moved from your foreclosures NYC home. Groceries, utility costs, and moving expenses are hard to cover once you have moved unexpectedly. This can help you from feeling overwhelmed during a stressful time.