Foreclosure can be a scary reality for any Georgia homeowner. Falling behind on mortgage payments can easily happen under the wrong circumstances, and on top of the emotional turmoil that can come from the foreclosure process, Georgia homeowners must also deal with the long-term consequences of foreclosure, which can impact their finances for years after the loss of their property. Here are the 4 largest consequences of foreclosure in Georgia and a few options for homeowners to avoid foreclosure and its effects.
1. Loss of Home
The most obvious of the consequences of foreclosure is the loss of your home. Failure to resolve the deficit on your loan will result in a foreclosure auction, where the deed of your house will be transferred to the highest bidder. This bidder will often be your lender, who will make a credit bid equal to (or less than) the amount of your debt.
Following the sale, you will have to transfer the deed to the highest bidder and vacate your property. Unless the home is auctioned for more than your deficit and you are able to claim surplus funds, you will not receive any funds from the sale. This also means that you will lose any equity that you have in the home.
2. Deficiency Judgements
Additionally, you may have to worry about deficiency judgments as one of the consequences of foreclosure, depending on the outcome of the foreclosure sale. If the highest bid on your home does not equal or exceed the amount that you owe on your loan, then your lender can file for a deficiency judgment. For example, if you owed $200,000 on your mortgage, but you home only sold for $150,000, then your lender could seek out a deficiency judgment in order to reclaim the remaining $50,000 from you. This will then leave you without a house and still in debt.
3. Taxable Income
If your home is auctioned off for less that you owe to your lender, there may be tax consequences of foreclosure for you to consider. This will not be a problem if your lender seeks out a deficiency judgment. However, if your lender chooses to forgive the debt, then that forgiven deficit will likely be considered taxable income by the IRS, so it will impact your annual income taxes.
4. Credit Score
Finally, one of the largest consequences of foreclosure is that it will significantly decrease your credit score and appear on credit reports for the following seven years. This can make it difficult for you to obtain other loans or good interest rates because lenders will review your credit report to see if they can trust you to make payments. Having a foreclosure on your credit report may also impact your ability to find a job or a rental property, as employers and landlords look at good credit reports as a sign of reliability.
Because the foreclosure will remain on your credit report for seven years, this can make it incredibly difficult to move on. To avoid this outcome, Georgia homeowners should try their best to seek out different ways to avoid foreclosure. Luckily, Georgia offers a lot of options.
Ways to Avoid Foreclosure
There are many ways for Georgia homeowners to avoid foreclosure. If you want to remain in your house, your lender will usually present remediation or loan modification options if you struggle to make your payments on time. In certain circumstances, you can also consider applying for forbearance or government aid if you are struggling financially. If you want to leave your property to avoid foreclosure, options include short sales, deed-in-lieu of foreclosure, and selling your home.
If you are struggling to make your mortgage payments, we recommend carefully weighing your options, communicating with your lender, and consulting with a professional to determine the best choice for your situation.
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If your Georgia property is facing foreclosure, you can sell to We Buy Houses In West Georgia today. We make fair cash offers on local houses in the West Georgia area. Selling to us means that you can immediately use the proceeds from the sale to resolve any default on your loan. When we buy your house, you don’t have to worry about the traditional hassles of selling. Our buying process is designed to help Georgia homeowners sell burdensome properties fast. You don’t have to worry about making repairs, decluttering, or even cleaning. You can also avoid commissioning a Georgia realtor to list your property, and you can bypass paying closing costs or any additional fees.
If you want to learn more about how we can help you sell your house and avoid foreclosure, we invite you to visit our How It Works page. Here, we offer full transparency about our homebuying process, including details about exactly how we calculate our offers. You can also check out Our Company page to get to know our team, our credentials, and our experience. Fill out the form below to get a no-obligation cash offer started now!