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| How Foreclosure Will Impact Your Credit In Fort Lauderdale, Florida | September 19, 2008, 3:15 am | visits: 22 | wordcount: 652
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By Marlon Baugh
In today's market, especially in Fort Lauderdale Florida, a lot of home owners are finding themselves in this situation with an adjustable rate mortgage that just adjusted and now the home has become more of a burden as it is no longer in their monthly budget. While other Fort Lauderdale home owners find themselves with a property where they owe more than the property is worth. Some of these home owners now face the decision of going into foreclosure or consider doing a short sale to sell their home.
Now we have all heard that both a foreclosure and a short sale will affect your credit negatively, but which one is worst? It is very important to get the facts on any situation that could affect your credit now and in the future years to come that my impact you from buying another home or getting any type of credit in general.
Now let's take a look at each case and the consequences and their impact on your credit score.
Foreclosure proceeding will begin once the home owner falls behind on their payments, usually within the 3rd or 4th month. Since Fort Lauderdale foreclosure laws fall under the judicial system, the lender must file a notice thru the court system; this allows the home owner to present their case before a Judge, who is normally sympathetic to home owners instead of the big banks, at least in the beginning. Now let's talk about how your credit will be impacted by foreclosure.
If the lender is successful in foreclosing on your Fort Lauderdale property and is sold at the auction in Fort Lauderdale Court house and it is sold for less than that what you owed to payoff the mortgage, then the lender can come after you for the difference which is known as a deficiency judgment. And yes if they are granted this deficiency judgment they can come after your other assets, such as your car as well as this deficiency judgment will show up on your credit report and if you think it couldn't get worst, this judgment can result in also a tax lien.
Now if the lender doesn't proceed with a deficiency judgment, it doesn't mean you are in the clear, as you will have to say hello to good old Uncle Sam. Basically the amount that was not recovered by the foreclosure sale will be considered forgiven debt, which is treated as income and you may have to pay income taxes on this amount. Consult you Fort Lauderdale tax advisor if you find yourself in this situation.
A foreclosure can cause your credit score to drop up to 250 points….that could take you from excellent credit to bad credit in a short period of time. The reason the drop is so significant is because a foreclosure indicates that the borrower is walking away from their financial obligations, very similar to a bankruptcy.
Now let's talk about Fort Lauderdale Short Sales, if you find that your house is upside down and you want to sell, then a Short Sale could be the answer. A short sale occurs when the lender agrees to reduce the amount owed by the homeowner to make it possible for a sale to occur.
Although it is not common for short sales to show up on one's credit, it can, the good thing is that the homeowner can negotiate the way it's reported. The most favorable way if it is going to be reported is "Paid Settlement" as this will drop the credit score 50-100 points.
Fort Lauderdale residents are finding that when it comes to foreclosure, there is no cookie cutter solution as each situation is different and should be treated in that manner. The best course of action is to get educated and the work with a professional such as a mortgage expert, such as myself, to help you navigate the different options to find the best solution for your individual situation.
Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in mortgage loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Commercial Mortgages. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit http://www.specializedfinancialsolutions.com/foreclosure.htm or Call 954-678-5796
Source:www.isnare.com | |
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