How Long Will A Mortgage Default Sit On My Credit ?
If you default on your mortgage, it means that you are unable to make the monthly payments. In such a case, there are 2 options available. One is the lending institution will offer a repayment plan that will ease your financial woes to a certain extent. In the other option, the lending institution will not offer a repayment plan, but will opt for a foreclosure. |
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In case of a foreclosure, the home will be repossessed by the lending institution and will be auctioned off. This way the lending institution will try and recover the unpaid mortgage amount. However, there can be instances when the real estate market is down and the auction will be unable to come up with the full mortgage amount. In this case, the difference has to be paid by you.
When you have a mortgage default on your name, the biggest worry is how long it will reflect on your credit. It goes without saying that defaulting on a mortgage will have an adverse credit rating and will have a lot of influence not just on future credit, but also on future employment opportunities.
Usually when you have a mortgage default on your name, the foreclosure will reflect on your credit report for a period of seven years. But, it is in the initial two years that your credit score will be adversely affected. Once you begin to rebuild your credit score and credit worthiness, your credit history will also improve. It will take around two to four years after the foreclosure before you will be able to get another mortgage at a relatively good interest rate.
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Rates of mortgage of commercial or residential properties have always been a cause of concern for many. This is one such thing which is seldom heard to reduce ever, the primary reason being that most people cannot avoid keeping their properties on mortgage to afford some luxuries.