Your credit score is important, and having a low credit score can prevent you from getting approved for a loan or credit card, renting an apartment, financing large purchases, or even getting a job. If you are having difficulty paying your mortgage, it is important to address the situation as soon as possible to minimize the effect on your credit score as much as possible.
- Foreclosure – A foreclosure occurs after you have defaulted on your loan. Like any other type of credit default, it will appear on your credit report, and your score can drop significantly. Foreclosures can remain on your report for at least seven years, and it can take some work to get your score up again.
- Deed in lieu of foreclosure – Because a foreclosure can have such a serious effect on your credit, you may assume that any other solution is preferable. A deed in lieu of foreclosure is when you voluntarily hand over your house to cancel the rest of your mortgage. Many people do not realize that credit reporting agencies view this as a default on a loan just like a foreclosure, and your score can be affected in similar ways.
- Short sale – Agreeing to a short sale may seem like a better solution, as it feels like you are selling your home on your own terms. However, when the bank agrees to accept a lower amount for your home than your mortgage balance, it will be reported that your debt was settled for less than the full amount. This can also cause your credit score to drop significantly.
- Mortgage modification – Obtaining a modification of your mortgage loan terms is one solution that may not affect your credit score at all. If you are able to make the new payments, you may be able to not only keep your home but also keep your credit score intact.
Discuss Your Options with a Salt Lake City Mortgage and Foreclosure Attorney
The sooner you call a mortgage modification attorney, the better chance there is that you can receive a modification and keep up with your payments before too much damage is done to your credit and finances. Call JLT Law at 801-797-2098 for assistance today.