Home loan modifications and foreclosure prevention programs are available in a variety of states with different servicers to homeowners who are having trouble meeting their monthly mortgage payments, but in instances where homeowners are looking to avoid damage to their credit score and find options that will help them gain the affordability they need to avoid foreclosure, many advisers are prompting homeowners to explore these opportunities early as mortgage trouble can inevitably lead to damage of a homeowner’s credit score if their situation becomes too problematic.
Understandably, many homeowners realize that if they face foreclosure or file bankruptcy they could see a big drop in their FICO score, but homeowners have also found that, in some cases, a short sale or deed in lieu of foreclosure program, and being 30 to 90 days late on a mortgage will also have severe negative impacts on their score as a result. Recently, a study reported on CreditCards.com made mention of the fact that, simply being late on mortgage or participating in a foreclosure alternatives program, like a short sale, can not only decrease a consumer’s credit score, but it will also take longer for consumers to repair their credit, particularly if they were in a good position to begin with.
Obviously, homeowners are aware, for the most part, of the adverse effects that may be seen when they are experiencing mortgage payment difficulties, but homeowners also need to understand that there are not only federal home loan modifications that are available, but other foreclosure prevention programs and assistance plans that can help with specific conditions that homeowners may face and happen to be the cause of their financial distress.
While home loan modifications have had mixed results by many homeowners and officials, many of the nation’s top financial institutions that service mortgages are still implementing these federal plans and are also often proprietary home loan modifications. There are still some issues that homeowners face, in relation to being unable to afford a home loan modification payment in some cases, factors like unemployment had been one of the main causes behind homeowners facing financial distress, but there are also programs that can address these particular issues outside of a modification as well.
Homeowners who are having trouble making their mortgage payment are usually advised to contact their servicer or a housing counselor that is approved by the Making Home Affordable Program as exploring options early when financial troubles may arise or be on the horizon can provide more opportunities and help homeowners avoid damage to their credit score as a result. While there are some programs within the federal Making Home Affordable initiative that may deal with homeowners who are unemployed, many states have also been offering similar foreclosure prevention plans they can provide subsidies to homeowners as a way to meet mortgage payments when they are unemployed, as well as, address issues like negative equity or the need for mortgage reinstatement when a homeowner has fallen behind.
Many of these programs are set in place to help homeowners who are already in a troubling situation, but for homeowners who are attempting to avoid a great deal of damage to their credit score, exploring these plans, speaking with a counselor, and contacting a homeowner’s servicer or state housing agency are all routes that can be taken and may provide the solutions that a homeowner needs to not only avoid the loss of their home through foreclosure but a substantial amount of damage to their credit score.