Foreclosure: Disadvantage or Advantage

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

Unfortunately with the state of Maryland having one of the highest foreclosure rates, many residents this year will face foreclosure and wonder what the next step is. The first step in dealing with foreclosure is to completely understand the process, and know what advantages and disadvantages it may offer. The most significant thing to be conscious of is that foreclosure is not the end of the world.

Although being faced with foreclosure is never pleasant, people who face foreclosure today are in a much better position than people who have faced it in the past. Because of the increasing amount of foreclosures in many areas across the nation, the range of options and resources for those in such situations has significantly increased. From federal government to local government, as well as a variety of community organizations and non-profits who specialize in foreclosure prevention; there are numerous efforts and programs aimed at keeping struggling homeowners in their homes and out of foreclosure.

Today lenders are more willing to help homeowners through a difficult period than they were in the past. One of the most important things is to act fast as soon as you begin to struggle with your mortgage and thing you may be facing foreclosure. There are real options today in regard to foreclosure prevention and losing your home is not the only answer.

For those who feel that there is no other solution to their homeownership problems other than foreclosure, they need to understand that walking away from a mortgage that you still may be able to pay has consequences. One of the major cons to foreclosure is that your credit score will be affected and may be impossible to get credit for a while.

Many people who walk away from their mortgages have the misconception that they can simply raise their credit scores again by paying all of their bills on time and eventually finance another home purchase. Typically homeowners who face foreclosure due to economic hardship, such as a job loss or divorce, normally must wait two to five years before buying a home again. On the other hand, people who walk away may face double that time frame before they are able to purchase another home.

Facts show that the advantages to foreclosure are slim to none in comparison with the long list of disadvantages. It is in the best interest of anyone facing foreclosure to act immediately by seeking counseling or programs that deal with foreclosure prevention. Simply settling for foreclosure without a fight will have disadvantages at the moment and for the long haul.