Foreclosure is the process in which a home is seized by the mortgage lender because the homeowner fails to make mortgage payments. The foreclosure process begins with homeowners becoming delinquent on their mortgage. In Florida, foreclosures require a judicial proceeding. Lenders received a court issued “Final Judgment of Foreclosure.” The home is then seized and sold by the lender. The foreclosure process is both lengthy and expensive.
Foreclosure can have several outcomes:
Currently, there are severe delays in the processing of foreclosure filings in the Florida court system. According to a recent article in the Miami Herald, it takes an average of 619 days, or about 20 months, for foreclosures to be processed. Some argue that the increased processing time is a positive for homeowners as they will be able to live in their homes rent-free for that time period.
However, foreclosures drastically impact credit scores in a negative way. A foreclosure remains active on a credit report for seven years and can significantly affect a borrower’s ability to purchase a home in the future. These effects can include a higher interest rate if conventional financing is used to purchase the new home.
While a foreclosure will not affect your credit rating forever, it is important discuss all of your options with an experienced and knowledgeable real estate broker. Please contact Kara Homes & Associates to discuss how foreclosure will affect you.