Pros and Cons of Facing Foreclosure

foreclosure house for sale

When facing foreclosure, it’s easy to think that it’s the worst-case situation and fail to see anything positive about it. However, there are some benefits that come with foreclosure, even if it’s hard to see what those are at first. Below are the advantages you might find surprising about foreclosures, and some of the negative aspects that you may not yet have heard about.

Save Money

After your lender begins the foreclosure process, there’s really no need to continue making mortgage payments. The chances are good that unless you can repay the total amount of payments you are behind on, you are going to lose your home anyway. Making a few more payments is not going to stop the process or help you in the long run.

Not only can you stop making your mortgage payments, but you can also start thinking about how to save money in the future. There’s a good chance that your mortgage loan was more than you could afford. You’ll have to find a new place to live, so now is the time to start looking for a new place that could save you money in the end. You can start looking for something that is cheaper and that perhaps will even let you save even more money down the road. For example, you may find an apartment that has all the utility costs included in the rent, which is a great way to save some cash.

Start a New Chapter

Too often when people are facing foreclosure, all they can see is the end of one chapter of their lives. It’s true that your home has played a big part in your life so far. You may have raised your children there, purchased it with your spouse, and have gone through many other milestones that involve your home. While remembering all of these, it’s just as important to remember the new chapter that you’re beginning.

A new beginning means a fresh start that you could also really benefit from. You could decide to move to a different neighborhood that has amenities close by that you didn’t have before. You could also examine your priorities and choose to live a different lifestyle. For example, if you’ve been spending hundreds of dollars on a gym membership every month, now may be the time to cancel it and put that money into savings. That could translate to earlier retirement, or saving up for another home of your dreams. Instead of focusing solely on the bad, it’s just as important to remind yourself of the good things that foreclosure may bring.

Negotiate the Terms of Your Loan

A mortgage is a very large loan. After entering into the agreement, most homeowners are stuck with it. The only chance they have at changing the terms is usually during refinancing. However, when homeowners are facing foreclosure, there is a certain point when the lender is still willing to work with them. This is because lenders don’t really want to take homes away from borrowers. It’s a long and expensive process for them, and they’d much rather work with the borrower to allow them to remain in the home.

As such, lenders are often willing to negotiate the terms of the loan during a loan modification. Lenders may agree to waive a certain number of payments, lower the interest rate on the loan, or extend the life of the loan to reduce the monthly payments. This not only lets homeowners stay in the home, but it also makes it more affordable for them to do so.

Damaged Credit

Although there are many benefits that come with foreclosure, there are, of course, some drawbacks. It’s best not to get hung up on these, but it is important to be aware of what they are. One of the biggest drawbacks of a foreclosure is that your credit will be damaged. It’s difficult to know how much your credit will be affected, but there’s no question that it will be impacted.

A foreclosure will typically cause your credit score to drop by at least 100 points. A foreclosure will also stay on your credit report for seven to 10 years, meaning that your credit score will be impacted that entire time. Fortunately, the impact won’t always be as great as it is at first. Generally speaking, your credit score should start rebounding within two years.

Deficiency Judgment

There are many ways a lender may try to unload your home after they have foreclosed on it. They may agree to a short sale, or to a deed-in-lieu of foreclosure. In either case, there will still be money you owe on the mortgage that these options don’t cover. In Florida, the lender can pursue a deficiency judgment against you when this is the case. To do this they file a lawsuit asking the court to award them the debt you still owe. If the court decides in the lender’s favor, you will be responsible for paying that money back. This is very difficult for borrowers who have just gone through foreclosure because they are typically already in a place of financial hardship and don’t have a lot of money left over to put towards these judgments.

Facing Foreclosure? You Need a Florida Foreclosure Defense Lawyer

Once a lender starts foreclosure proceedings, it’s easy to think that the worst has happened. However, that’s not always true. There are some positive changes that can come with foreclosure and, in many instances, you can avoid it altogether. A Fort Lauderdale foreclosure defense lawyer can advise on what options are available to you.

At Loan Lawyers, we are dedicated to helping homeowners who are in fear of losing their homes. We’ll help you determine if there’s any way to keep your home and advise on your legal options if you cannot. Call us today at (954) 523-HELP (4357) for your free consultation so we can review your case.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.