Foreclosure is one of those scary words that homeowners never want to hear, but sadly it is a term that thousands of homeowners have heard over the last several years. While most homeowners are aware of what a foreclosure is, they are not always aware of the effects of foreclosure. If you or somebody you know is facing a foreclosure, please read on to find out what kind of effects the foreclosure can have on not just you, but your neighbors as well.
The Effects of Foreclosure
One of the worst effects of foreclosure is the fact that you have no place to call home. Many people end up having to rely on family and sometimes friends for a place to stay right after a foreclosure because of financial reasons. Some people are able to save up enough money to move into a rental home or apartment after their foreclosure. Some people can actually find themselves homeless following a foreclosure. What happens to you will vary depending on your financial situation during the foreclosure process.
Another big effect of foreclosures is the impact it has on your credit rating. With a foreclosure your credit is going to take a hit because you are not meeting your obligations, plus you will have a history of late payments that happened before the foreclosure.
Even though it will negatively impact your credit rating, the damage is not permanent and there are things that you can do to help repair your credit. However, you need to realize, it wont happen overnight.
This effect of foreclosure is not felt by everybody, but for some it can be hard to find or even keep a job after a foreclosure because of the negative impact it has on your credit rating. Some industries require their employees to have a good credit score in order to get hired, while others include a foreclosure as grounds for termination.
Foreclosures can also impact your mental health, as well as lower your self-esteem. The impact of losing your home is rough, plus the entire foreclosure process itself is stressful. Foreclosures can often lead to depression.
As we mentioned earlier the effects of foreclosures don’t impact just you; they can also impact your neighbors and your community. Unpaid utilities, trash removal, unpaid property taxes, and many other community fees often go unpaid when facing foreclosure. This hurts the community, but can also leave those left in the area picking up the pieces because of rate hikes to help cover the cost of bad debts. Property values also take a hit with foreclosures, how big of a hit they take depends on the area and the number of foreclosures. Not to mention neighbors often have to deal with the neglected yard and many other problems associated with a vacant house until the bank successfully sells it.