The initial cost of foreclosure to a borrower begins with factors that cause the occurrence of delinquencies in the first place. Major contributors to these factors are job loss, death, illness, divorce, and many others. One of the most current factors is the lack of knowledge and/or determination that people have with the mortgage industry and the discouragement of being able to do anything about their situation when they are faced with financial difficulties and/or poor credit situations.

A foreclosure can have a significant effect on the borrower's life. Foreclosures can have a 7 to 10 years negative effect on a borrower's credit report. A borrower who has applied for a mortgage or any loans for that matter, know that the worse a credit rating is, the more difficult it is to get a decent loan. In addition, it can affect a borrower's ability to find a decent place to lease or rent, if that becomes the alternative housing solution.

After a foreclosed home is sold at an auction, it is not uncommon for the borrower to still have a remaining balance on the loan. There are many lenders who try to have all fees and liens paid off by the next buyer. However, depending on certain programs, regulations, and state laws there may be some loans that are not easily resolved through the transfer of loans. Therefore, the responsibility still falls on the borrower that has had their property foreclosed on.

The borrower will have to find alternatives and possibly additional funds for moving expenses, storage units, and/or lease deposits. The borrower may have to adjust to a new lifestyle where they don't have the added benefit of receiving property tax refunds and the security of owning their own property. All equity left from the property will be a loss for the borrower.

There are many government programs, lending and mortgage institutions, and legal services that offer help to individuals or families that are facing foreclosure. The likelihood of finding a suitable solution for the borrower is greater when actions are taken immediately after unfavorable financial situations occur. Many lenders will try to work with borrowers if problems are brought to them early. Otherwise, delinquent payments may become costly for the borrower, the servicer, and the lender or investor. Delinquent payments will have late fees attached to the borrower's next payment and the servicer will have had to pay out the monthly cost of the loan from their own funds, thereby losing some available funds for the months that the delinquencies occur. The loans that are held in the lender's portfolios hold a significant risk when they fall into delinquency status and the investors who have stocks or bonds based on a certain set of loans are affected by the uncertainty of their investment status.

Above all, the borrowers must remember that they are not alone with the unfortunate mishaps that foreclosure can bring, which may be the only thing left working for them. There are other parties who suffer and would like to try to do their best to keep unfortunate situations like these from happening. Working together with your lender or consulting with professionals to avoid foreclosure can make a considerable difference in the credit and financial future of all parties concerned.