Going into foreclosure can be overwhelming, and downright heartbreaking. But in some cases the prospect of foreclosure is not as bleak as you might think. Complicating matters worse are the sheer number of rumors and half-truths about foreclosure swirl; there are all sorts of foreclosure myths floating around this internet of ours. Foreclosure can be reversed after the fact, foreclosure starts after the first missed payment, foreclosure means you’ll never get approved for another mortgage — are any of these supposed “facts” really true?
Let’s dive into some of the most common foreclosure myths and what you really need to know about the prospect of a Sacramento foreclosure.
- Lenders Want to Foreclose on Homes
A lot of people think that lenders relish the chance to take back a home. After all, they get to sell it again at their own desired price and keep the money, right? This is one of the most common foreclosure myths. The truth is that for a bank, the process of foreclosure is very costly and time consuming. They may never recover their total costs between your missed payments and legal fees. In short: They won’t do it for kicks. And it’s in their best interest for you to remain in the home and get caught up on payments. For this reason, you should try to negotiate a loan modification or obtain a forbearance whenever possible to avoid foreclosure. Win-win for you and your lender.
2. Once Foreclosure Starts, You Can’t Stop It
If you get a foreclosure notice, that’s the end of the line, right? It’s a done deal. Well, not so fast. If, for instance, you file for bankruptcy, there will be an automatic stay on any foreclosure proceedings. You may also be able to stop the process if you’re able to bring your mortgage account current or negotiate a modification. Never say die until you have to. If you’re motivated to stay in your home it’s always worth exploring options to stay.
3. Foreclosure Ruins Your Credit For Life
Sure, foreclosure doesn’t do anything good for your credit. But you don’t need to wave goodbye to your credit worthiness forever. Many people can get approved for another home loan within five years. The one upside of undergoing a foreclosure is that you will stop having late payments reported every month. While the foreclosure itself will remain on your credit and drop your score temporarily, the damage isn’t permanent. If you make all other payments on time for about three years, you’ll begin to see the number bounce back.
4. Foreclosure is Always a Bad Idea
It makes sense that foreclosure gets thrown around as a cautionary tale. It’s no fun to be forced out of your home, and the credit implications impact your immediate future. Still, sometimes a foreclosure is a blessing in disguise. You may be saying goodbye to a home that you’ll never be able to afford again or a property with a lot of much-needed repairs. Sometimes foreclosure is the best way to rid yourself of a situation that is no longer suitable. It’s certainly better than continuing to take out high-interest personal loans or borrowing from family to keep an unrealistic mortgage afloat.
5. Anyone Who Says They Can Save You From Foreclosure is Lying
As the Los Angeles Times points out, there are plenty of scams out there when it comes to people saying they can save you from foreclosure. It’s not a foreclosure myth that you should be careful about getting assistance. If someone reaches out claiming to be in contact with Freddie Mac and they don’t have your loan number — red flag. However, real help does exist. If you know you’re heading toward foreclosure, you can sell your home for cash before you hit the point of no return. A company like California Family Homebuyers purchases homes in Sacramento as-is. We can often close within a week, which could help you avoid the foreclosure process if you know you’re falling behind. Call us today to see if we can help!