Owning a home is one of the biggest investments you can make in your lifetime. However, owning the wrong home in St. Charles, St. Louis , St. Louis City, Jefferson County can lead to significant damage to your credit. This is especially true if you are struggling to pay your mortgage or if you have purchased a home that is too expensive for your budget. Life happens and sometimes you have to make changes in order the get your finances back on track. There are unforeseen things that happen that are sometimes not in our control. In this blog post, we will discuss five ways owning the wrong home in St. Charles, St. Louis , St. Louis City, Jefferson County can damage your credit.
1. Late Mortgage Payments
One of the most significant ways owning the wrong home in St. Charles, St. Louis , St. Louis City, Jefferson County can damage your credit is through late mortgage payments. If you are unable to make your mortgage payments on time, your credit score will take a hit. Late payments stay on your credit report for up to seven years and can significantly lower your credit score, making it harder for you to secure credit in the future. Let’s face it mortgage companies are not very flexible when it comes to mortgage payments. Stay up to date with you payments and if you are unable to consider selling your home in a timely manner.
2. Foreclosure
If you are unable to make your mortgage payments and sell your home in a timely manner, you risk foreclosure. Foreclosure occurs when the lender takes possession of your home because you have failed to make your mortgage payments. The timeline for foreclosure varies state to state as laws differ. It is important to looking into your on state’s foreclosure law. Foreclosure can stay on your credit report for up to seven years and can severely damage your credit score. In addition, having a foreclosure on your credit report can make it difficult for you to secure credit in the future. If you find yourself in foreclosure consider selling in a timely manner to an individual that has experience with foreclosed property.
3. Short Sale
If you are underwater on your mortgage (meaning you owe more on your home than it is worth) and are unable to make your mortgage payments, you may need to consider a short sale. A short sale occurs when you sell your home for less than what you owe on your mortgage. While a short sale is a better option than foreclosure, it can still damage your credit score. A short sale can stay on your credit report for up to seven years and can make it difficult for you to secure credit in the future. you will want to consider selling your home prior to short sale if possible to save your credit.
4. High Mortgage Payments
If you purchased a home that is too expensive for your budget, you may struggle to make your mortgage payments each month. This can lead to missed payments, late payments, and even foreclosure or short sale. In addition, if you are using a significant portion of your income to pay your mortgage, you may not have enough money left over to pay your other bills. This can lead to missed payments on credit cards, car loans, and other financial obligations, which can further damage your credit score. Don’t let the vicious cycle take over.
5. High Debt-to-Income Ratio
If you are using a significant portion of your income to pay your mortgage, you may have a high debt-to-income ratio. Your debt-to-income ratio is the percentage of your income that goes toward paying your debts each month. If your debt-to-income ratio is too high, it can make it difficult for you to secure credit in the future. Lenders may see you as a high-risk borrower and may be less likely to approve your applications for credit cards, car loans, and other financial products.
Owning the wrong home in St. Charles, St. Louis , St. Louis City, Jefferson County can lead to significant damage to your credit. Late mortgage payments, foreclosure, short sale, high mortgage payments, and high debt-to-income ratio can all damage your credit score and make it difficult for you to secure credit in the future. If you are struggling to make your mortgage payments or are considering purchasing a home, it is important to carefully consider your budget and ensure that you can afford the home you are purchasing. If changes, so you need to frequently re evaluate your budget. By doing so, you can avoid the pitfalls of owning the wrong home in St. Charles, St. Louis , St. Louis City, Jefferson County and protect your credit score for the future. If you find that your current home is not fitting into the budget anymore picking the right time to sell in imperative in saving your credit. Many people wait until it is too late. Would a fast sale of your St. Charles, St. Louis , St. Louis City, Jefferson County home help you to resolve an issue like this ? Our team can help! Reach out to Einstein Real Estate Development today to learn more! 314-433-3014