There are some misconceptions out in the public, about how long a foreclosure can stay on the credit report, how long the foreclosure affects their ability to borrow negatively, and how long it will be, before they will be able to purchase another home. Some borrowers believe, unfortunately, that after a foreclosure, they will never be able to buy another house again, or qualify for a car loan, some even think they will not be able to even get a credit card at a decent interest rate. All these thought simply just because they lost a house.

While having a foreclosure on your credit, will have serious negative consequences, the myths surrounding the issue can be much worse than the actual effects. On the bad side of things, a foreclosure will remain on your credit report for the full seven years. A borrower can request the bank to remove the record at any time, and delete mention of the foreclosure, banks are usually never interested in doing this, and there is little that could force them to do so. This means that as a former homeowner, you will most likely have to deal with having the negative mark on your credit report, for nearly a decade. The good news is that its most damaging effects will be felt in the earliest years after the loss of the home. The longer in time the homeowners are removed from the initial foreclosure, the less of a negative effect it will be on their credit scores. If you have great credit, and then show missed mortgage payments, and then a foreclosure filing, your score can instantly drop into the low 500s or even the high 400s by the time the sheriff sale and eviction occur, assuming you go that route, and stay till the end.

Things will get better, as long as you work on repairing your credit history, by paying off any other debts, using borrowed money wisely in the future, and disputing negative, or old information contained on the report. If you do all the right things again after a foreclosure, your score will begin to improve despite the foreclosure. The time period between foreclosure, and owning a home again, is almost entirely dependent on your effort to repair your credit and establishing a new, on time payment history. You may be able to apply for a competitive loan within a couple of years after the foreclosure if you are able to show excellent credit since then, and you did not have a history of bad credit before the foreclosure, and you can show that if was all due to some circumstances basically beyond your control. Saving up for a true down payment of 15-20% of the purchase price of the home is also important to the banks when considering whether or not to offer a housing loan. If you only focus on credit repair, you may still be able to qualify for a new loan within 2-3 years after foreclosure. On the other hand, some may have to wait 4-5 before their credit repairs itself enough naturally.

Of course, if homeowners are able to stop foreclosure before the lawsuit, sheriff sale, and eviction have completely gone through, they will find it much easier to obtain any new credit later on. But, unfortunately, this may not be possible for some borrowers who have no other choice than to give up trying to save their home. The best they can do after this is to work on their credit report and make sure they get a fresh start after losing the property. Although it may take at least a few years to qualify for any new mortgage, this period of time should be used to pay off other debt, establish on time payment history, and save up for a down payment on a new home.

While the effects of foreclosure can be severely negative, you do have alternative ways that you can go, to avoid a foreclosure, and in some cases be able to stay in your home. We have been able to have some banks modify the loan for our clients and they are able to keep their homes. The first thing you should do if you are facing a situation where you are going to fall behind on your mortgage, is consult an experienced Short Sale Realtor. They will be able to help you decide your best plan of action. The best time to decide is before someone else, like the bank, makes the decision for you. We would like for you to contact us, for a free no obligation evaluation of your options, while you still have options. If you are already behind on your mortgage, sometimes 5 or 6 months, we may still be able to help you.