Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Foreclosure is scary. Before the bubble burst and the housing crisis hit, it was taboo to go through foreclosure. Now it’s almost common. And, unfortunately, despite the rosier outlook for the real estate market, too many homeowners are still facing foreclosure.
The most important thing for any homeowner in this situation to know is that there are alternatives—foreclosure is not inevitable. If you act quickly and tackle your problems head-on, there may be a solution. You just have to accept the reality of where you are and what needs to be done to get you out of trouble.
“Once you put your head in the sand and pretend foreclosure is not going to happen, it will happen,” said Stan Cameron, housing development coordinator for the Foundation for Credit Counseling. “The most important thing you can do in a situation like this is to be proactive.”
According to Cameron, the question you need to ask yourself while facing foreclosure is whether, in the long-term, you can afford the monthly payments on your mortgage. Your monthly housing expense shouldn’t exceed more than 31 percent of your gross income, he said.
If the payments are too much or your income is too small or volatile, it’s time to consider some options to avoid foreclosure. Depending on your situation, you may want to pursue one or more of the following:
1. Ask for forbearance and make the payments later. If you are stuck in a temporary jam, you can try calling your lender and asking for forbearance, which means that the lender will give you a few more months to catch up on your payments.
2. Seek out a loan modification or refinance. This is a great option, especially if your home is not underwater. New government rules are also creating more opportunities for people with underwater mortgages to refinance, such as the HARP program.
3. Ask the lender for a short sale. Through a short sale, you find a homebuyer that will pay a price upon which your lender agrees. You can then sell your home for less than the amount you owe on the mortgage. Sometimes, however, you may have to pay part or all of the balance of the debt you still owe the lender after the sale. Remember that unless the Mortgage Debt Relief Forgiveness Act of 2007 is extended past its 2012 deadline, you may have to pay income taxes on any forgiven debt because the government considers it phantom income.
Click here for more information about short sales.
4. Give the lender your home through a Deed in Lieu of foreclosure (DIL). This option is actually very similar to a short sale. You hand over the deed to your home to the lender. In exchange, the lender cancels your debt and short sells the home. Lenders are leaning more towards short sales these days, so this may be a more rare find.
5. File bankruptcy. This is the worst of all your options, but bankruptcy does stop the foreclosure process as it stops all your lenders from collecting debt from you until you work out an agreement through the courts.
The last three options, including foreclosure, will damage your credit score, though to varying degrees. A short sale or a DIL will typically damage your credit much less than foreclosure or bankruptcy. You will also be able to borrow again more quickly with a short sale or DIL—it’s about two years for those options as compared to five years for foreclosure.
“Remember though that none of these options are a death sentence,” Cameron said. “The credit impact is not something that’s going to remain with you for life.”
If you are facing foreclosure and need help, seek out a free housing counselor from a non-profit organization like the National Foundation for Credit Counseling or the U.S. Department of Housing and Urban Development.
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.