Some homeowners have found that there are no foreclosure prevention options available for their specific situation and as a result many are turning to foreclosure alternatives as a way to exit their home without facing a formal foreclosure process as there are some benefits that can be gained from participating in programs like short sales, particularly for homeowners who are in need of assistance when they transition from their homes. However, officials have also stated that homeowners need to make sure they fully understand what a short sale or deed in lieu of foreclosure plan will entail due to the fact that there can be some problems that arise.
It was reported a few months ago that homeowners stand to take a hit to their credit score, even if they participate in a short sale, that may be comparable to the setback they would see if foreclosure had taken place on their home, and this is something that homeowners need to consider well before it gets to the point where a short sale or deed in lieu of foreclosure plan may be their only alternative. Homeowners who may be in a position where their credit has survived the financial troubles that may have lead to foreclosure usually find that, particularly when missed payments on a home loan are present, their score may not be in the best position at the present time. This can be made more difficult especially when foreclosure or a short sale happens to be a homeowner’s only option, so avoiding the loss of one’s home at all costs is to be a homeowner’s main priority for a number of reasons, with keeping a more positive credit score being just one.
However, some homeowners may find that their servicer will be participating in the Home Affordable Foreclosure Alternative plan and as a result of successfully completing a short sale on a home, some homeowners have seen relocation assistance funds offered which, depending on the situation and the bank that a homeowner works with, had been sizable in the amount of assistance the homeowner has received. While this can be helpful for some homeowners, particularly those who may find that these additional funds could be used to help them stay afloat in other areas of their financial life, like credit card payments or a car loan, homeowner’s do once again need to remember that a short sale or deed in lieu of foreclosure plan can do more damage to a homeowner’s credit score and this could cause overall costs on other lines of credit to increase.
Obviously, if a homeowner’s credit score drops interest rates on credit cards or other debts could increase in some cases, but of course if a homeowner is facing a difficult financial time and has missed payments on their mortgage, they may have already seen problems related to their credit score rise. However, the good news in these situations may be that there are fewer individuals who are entering into the housing market at the present time and, as a result, banks may be more willing to help homeowners avoid the loss of their home due to the fact that they do not want these homes simply sitting empty. Yet, despite the fact that there are numerous options available to help homeowners avoid the loss of their home, sometimes it’s inevitable but homeowners need to remember that if they have done all they can and now must choose to face either foreclosure or participate in an alternative program, there may be some assistance available through options like a short sale which could make the transition process from one living arrangement to another much easier and potentially more affordable thanks to these assistance funds.