Surviving a Foreclosure Starting Over

Facing a foreclosure is not a pleasant experience no matter how many years you have invested in the property. However, the longer that you have resided at the property, the more you have at risk when faced with the inevitable disaster you face after a foreclosure.

The Aftereffects of a Foreclosure

Not only do you lose all of the equity that you have accrued in your home when it is foreclosed, but also, you lose your place to live. In some cases, you also lose your friends and neighbors as you are forced to move away and relocate to new horizons.

Instead of broadening your horizons with the move, you narrow it to a point that becomes increasingly uncomfortable. Instead of worrying about being able to meet the mortgage payment, you now become entrenched in the fear that you cannot provide a reasonable standard of living for your family.

You’ve been reduced to begging relatives to allow you to move in temporarily. Now, you have to drive even further to get to work and your income is stretched even further. No one wants to loan money to someone who has a foreclosure on their credit report. Your credit score is so low that it is almost off the chart.

How will you be able to obtain the money that you need to provide your family with a place to live- perhaps a more affordable home on a smaller scale? You and your credit have both been branded by that most onerous of words, “foreclosure.”

On top of that, no credit card company wants to allow a homeowner with a foreclosure attached to his name to obtain a new credit card account or continue using an existing credit card account.

Instead of thinking about buying the daily newspaper, you are scouring the newspaper that you picked up in the company lunchroom as you devour your brown bag lunch. How could it all be reduced to this? How could rising interest rates and mortgage payments reduce you to a level where you cannot even afford to go out and purchase your morning cup of coffee? How could this happen to you?

Moving on and Putting Your Life Back Together after a Foreclosure

It doesn’t matter how it happened. What matters is that you pull yourself up out of your self pity and fins a path bask to easy living and carefree thoughts. Even if you have lost your home, your self respect, and your comfort zone, you can still move forward in an attempt to regain your financial footing.

Look to debt consolidating in an effort to reduce your remaining bills to the smallest, possible amount of debt. Consolidating your debts to a reasonable monthly payment will free up what little cash you have in your name.

Alternatively, you can reduce your debt on your own with a few simple strategies. First of all, you can reduce your level of spending, limiting it to necessities such as fuel, groceries, medicines, and dental expenses. Next, you can reduce the number of credit cards that you have.

Begin to pay off the credit card with the smallest balance remaining on it. Once it is paid off, you can close out the account. This strategy will limit your ability to overspend. Plus, it saves your money by reducing the overall monthly payment to bills since you have reduced the number of accounts that you are paying interest charges on.

In addition to saving money, these strategies can help to improve your credit score. After all, your credit score has taken a negative turn due to the foreclosure proceedings. Responsible spending and timely payments can help to restore your credit score more quickly than continuing to make poor financial decisions.

Look for alternate methods to save money. Start to purchase generic brands at the supermarket and drugstore. Buy second-hand clothing and sports equipment. Look for a part-time job. After all, now that you don’t have to mow the lawn that used to go with the possession of a home, you have lots of spare time on your hands.

Looking for a Place to Call Home after a Foreclosure

Additionally, displaced homeowners should look for an inexpensive place to call home while trying to get back on their feet. If you have been lucky enough to stay with friends or family since the foreclosure first occurred, arrange to pay some type of rent to repay the favor and extend your welcome for a bit.

Find out how long you will be permitted to stay and start to look for an alternative before that time arrives. Set up a series of visits with family and friends if necessary, keeping each visit short so that you don’t overstay your welcome.

Once you believe that you are ready to take the plunge again and buy a home, take the time to discover if this belief is valid or not. Check your credit score and find out exactly how low it is. If it’s still below 600 and it very well could be, reconsider your decision to purchase a home. Individuals with poor credit scores typically receive the worst interest rates and terms thereby increasing their risk of a foreclosure.

Next, start to save up enough money so that you have a reasonable down payment to place on the home. Realistically, 20% of the purchase price is a good target to aim for a down payment. It eliminates the need to obtain PMI or private mortgage insurance. In the second place, it reduces the size of your mortgage payment. The larger the amount of money that you can put down on a home purchase, the smaller the amount of interest that you will have to pay on the loan. The smaller the amount of money that you borrow, the smaller the amount of the monthly mortgage payment will be.

Finally, you should shop around for your next home carefully. Select a home that is within your ideal price range. Be realistic and settle for a home that is smaller and therefore, less costly. After all, isn’t it better to live in a home that is a bit smaller than you r original dream home than to foreclose on a home that is larger than life and more than someone in your financial situation should take a chance on?

By Susan Keenan