Q. Dear LoanSafe.org; I have been struggling to pay my mortgage for well over a year and I am now considering walking away from my property. Things have not worked out as planned and I am planning to find a rental in the near future. From what I have researched, my credit score is most likely going to go down the drain and I would hate having this horrible mark on my credit history forever. So I am wondering, how long does foreclosure stay on your credit?
A. Do not feel bad about walking away, you are definitely not alone. There are thousands of other borrowers around the nation who are currently walking away from their mortgage due to financial struggles. Though this is a dreaded event and may take a tole on your financial standings for years to come, there are ways to improve your credit score over time. Think about what you can do to better your standings after this event, and not just how long it will be on your report.
A foreclosure is one of the worst things you can have on your credit history, other than a bankruptcy. Not only will this have a dramatic affect on your current score, but a foreclosure will remain on your credit report up to seven years from the date of sale.
After the foreclosure takes place it may be hard to secure any type of financing without being considered a financial risk. Lending institutions will likely charge borrowers extra high interest rates if you are looked at as a potential danger. While you should have no problem finding a rental after this event takes place, obtaining any type of financing in the near future is probably out of the question. However, even though a foreclosure will remain on your report for seven years, you should be able to rebuild your score in much less time.
I’m not sure if you are behind on your payments or not, but foreclosure seems to be taking quite some time in most states (sometimes up to a year or two) and during this time you may be able to save up a good amount of money. Banks and courts alike are extremely backlogged with foreclosures. Personally I would take advantage of this situation and save up as much money ass possible until you are forced to move. Keep your head up and always try to look at the bright side of things!