How will a foreclosure affect my credit?

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How will a foreclosure affect my credit?

When we purchased our home 13 years ago, the mortgage was in my husband’s name only. I actually signed away my dower rights. However, 4 years ago we added my name to the title under survivorship. He passed away the next year. I have been paying the mortgage for the past 3 years and no longer can. The house is upside down in the mortgage and I want to walk away. Can I without it adversely affecting my credit? Can I buy another home?

Asked on May 23, 2012 under Real Estate Law, Ohio

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

I am so sorry for your loss and for the situation.  I would urge you to contact you state attorney general's office to see about programs for those in your situation and about lowering the interest rate, etc.  You also need to speak with some one about a deed inmlieu of froeclosure (where you sign the house back over to the lender; forclosure is very expensive so they might be agreeable) or a short sale. The inportant thing here is to have them waive the deficiency.  Now, foreclosure stays on your credit report for 7 years like any bad debt.  It will indeed affect your credit rating.  But if you keep everything else current for at least 2 years your score could rebound.  Good luck.


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