How Foreclosure Can Affect Your Credit Score
Previous clients of Joan Ramirez, who is a Staten-island, N.Y.- based real estate broker, surrendered to foreclosure after a prominent institutional lender gave them a mortgage which they could not afford to pay. The mortgage was set up with 100 percent financing through a fixed-rate first mortgage, in conjunction with a monthly adjustable second mortgage. “After two months since they purchased their new home, it became unaffordable”, the real estate broker, Ramirez, explains.
The cause for this issue stems from the fact that the interest rate on the second mortgage rose to a level that the clients could not afford. As Ramirez clients fought to pay their mortgage, which caused them to go into foreclosure in the first place, they became unable to pay their other bills, such as cell phone and credit card bills. The lender would not adjust to the terms of the second mortgage, so the clients were faced with no other choice but to file bankruptcy, which will most definitely affect their credit for the next seven years. “ They have lost their homes and their dire situation will indeed put much stress on their marriages”.
For millions of people across the country, the chance of foreclosure has became a very real possibility, and many right now are living with the effects foreclosure has on their credit record. “Reduced credit scores can result in being refused credit, such as credit cards and car loans, and are facing much greater rates for loans and even other items, such as insurance, that depend on credit scores,” explains Andrew Housser, co-ceo of Bills.com, a free consumer personal finance site.
Waiting to get that new job? Your possible employer perhaps may want to look at your credit score to decide how trustworthy and responsible an employee you will be. Credit card companies may deny your application. When you want to buy another home always keep in mind that it can cost you thousands of more dollars of your credit score.
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