The answer is YES it will damage your credit. There are options out there and every option should be explored prior to going into foreclosure. A short sale is a better idea, but it still hurts your credit rating and usually is a long and tedious process. All in all - if you can avoid it, DO!

We list bank owned properties for several banks and they never want to displace anyone from their home, ever. It costs the bank a lot of money to have a customer go into foreclosure and they try to avoid it at all costs. They will work with you to try and find a solution. Words of advice though, don’t wait months and months before letting the bank know of your situation. Right when you know that you are going to have a problem making a mortgage payment, call the bank. Be upfront and honest with them from the start and hopefully you’ll both be able to find a solution to keep you from going into foreclosure. Good luck James!

You can drop 180-220 points depending on the bureau. A Short sale is only slightly better. Do it as a last resort.

James
Great answers so far. You can contact Kevin.Smith@wellsfargo.com for a complete answer on how it will affect a future purchase. I believe it takes 3 years before you can buy again and it does stay on record for 7+ years. Late payments also affect your rating but can sometimes be explained with mitigating circumstances. I agree, contact your lender and see if you can work out another solution. If you owe more than the home is worth also see what you can do. Kevin may have some additional ideas. Good luck.
Mary

Before you make the decision to allow your property to go into foreclosure, consider some alternatives that would not affect your credit score quite as drastically in the future. Contact your mortgage company to explain your hardship circumstance then ask them about the consideration of modifying your mortgage terms, selling the property with "short-sale" approval, or deeding the property to the lender in lieu of foreclosure. Although all of these will adversely affect your credit score, none will decrease it as harsely as a foreclosure action.

Will it harm you in the future? Short answer...yes. Your credit score will take a hit and it'll stick out on your credit report.

How bad will it harm you in the future? Depends on what you're going to be trying to do with your credit. If you try to get another home loan...or any kind of loan in the near future, you'll likely run into bigger hurdles and/or higher interest rates. If you try to rent, you may be asked to provide additional deposit or may just get denied. You will not be able to walk away from a foreclosure unscathed. Many insurance companies now base their rates on your credit score so you may face higher insurance premiums.

As others have said... going into foreclosure shouldn't be out of choice. If you still have a choice... don't do it. Short term gain...Long term pain.

If you credit is prefect keep it that way HOWEVER if your home is going to foreclosure YES IT will effect your credit and scores. It is undetermined so many foreclosures how lenders will review a future purchase from that buyer. You most likely will not be able to purchase a home for minimum of 2 years after foreclosure. However it all depends on your overall credit scores at that time.
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Hi James

It will be very harmful to your credit and stays on there for 7+ years. If you can avoid foreclosure you should. You can call the bank and try to work out a better payment option on your mortgage or you can try to sell your home prior to foreclosure. I would be happy to answer more questions. Send me an email or call 206-714-1384 kjackson@johnlscott.com