Loss of Home

• The most obvious impact of the foreclosure process is the loss of your home. To avoid becoming homeless when you are finally evicted, be proactive in seeking new lodging when you know foreclosure is going to occur. Some families will rely on the support of family members while seeking a new place to live. Others will look immediately for a rental home or apartment. It may take time to find a landlord that will accept you with a foreclosure on your credit score, so you need to plan some time to search.
  
  

Credit Worthiness

• Foreclosure has a negative impact on your credit score. The foreclosure will stay on your credit history for seven years. This does not mean that your credit will be completely ruined. If you maintain a good payment history with your other debts and had a good credit score prior to foreclosure, you will be able rebound quickly. My FICO indicates you can rebound from a foreclosure in as little as two years. It will still be seen on your history for the full seven years, however, so potential mortgage lenders in your future may increase your interest rates or deny your loan because of the foreclosure, even if your score is acceptable.
  
  

Social Impacts

• When your lender forecloses on your home, your entire community becomes aware of your financial struggle. This can create social tension or embarrassment for you or your family. Some employers also base their decision to employ individuals on their credit ratings. If the foreclosure has enough of a negative impact on your credit score, you may struggle to find work after the process occurs. If you are currently employed, you may find your poor credit or the foreclosure itself is grounds for termination. Check your employer's policies so you can be prepared.
  
  

Costs of Foreclosure

• Foreclosure affects more than just you and your immediate family. Foreclosure costs the community and your lender as well. The Joint Economic Committee of Congress estimates the full cost of foreclosure to be $77,935. This includes over $19,000 in costs to the local government through the taxes lost after foreclosure, and $1,500 in property value each neighbor loses as the home sits vacant. The study estimated that the owner loses an average of $7,200, which may cover equity, the cost to move and any necessary legal fees paid during the process. Your lender loses around $50,000, which includes lost income through interest and the cost to maintain and resell the property after you have moved out.
  
  

Deficiency Judgment

• Some states allow lenders to file deficiency judgments on homeowners who have been through foreclosure. When a home falls into foreclosure, the lender will sell it in order to recoup some of the losses. Sometimes the current market and the amount still owed on the home make regaining all of the money impossible. If the lender files a deficiency judgment, you will have to pay the difference between the loan amount and the sale price on the home. In this case, foreclosure does not end your obligations on the debt, and you will still have a monthly payment until the difference is paid.