Losing your home due to a foreclosure doesn’t only mean damage to your finances and assets, it also has devastating effects on your whole being.
While a foreclosure can hurt, it doesn’t have to affect you forever. Recovering from foreclosure can take a while. So, while you are in the process of recovery, use it as a leverage to become a better homeowner.
Living Through a Foreclosure
Leaving the place you call home and moving to another neighborhood can be emotionally draining. It was you who invested time, money and energy to that house. Losing it was the last thing you’d ever want to happen.
However, it isn’t just the adults who are affected. Children belonging to a family who just lost a home may also be affected. Moving to another school and saying goodbye to their friends can be emotionally draining for children. Moreover, moving to a new unfamiliar place may make them feel less secure and safe.
Remember that you also have to give your children adequate support during such tough times. They may not fully grasp why all this is happening, but you have to try to make them understand. You also have to reassure them that the family may have lost a house but you won’t lose each other, and that’s more important.
A Foreclosure is Detrimental to Your Credit
A foreclosure’s damaging effects can be most evident on your credit report. It can be very detrimental to your credit history.
This will stay on your credit report for seven years. During this time it will be hard for you to get a mortgage or any other loan. This is because lenders and banks consider a foreclosure as a major derogatory entry on your report.
The moment your property’s foreclosure process starts, your credit score will also begin to suffer. As you move through the process, your scores will also slowly deteriorate. It can easily hurt your credit as much as 200 points, but this also depends on how high your credit scores are.
Do not add insult to the injury.
Try your best to always be consistent in paying your other debts. This may not be evident right away. But if you keep on making full, on-time payments on your other debts, lenders, and creditors may realize that you are doing something about your problem. If they see that the foreclosure is just an isolated case on an otherwise strong credit report, creditors may reconsider giving better offers.Planning to refinance to a lower rate? Click here.
Find Out the Root Cause
Foreclosures don’t mean that you will never be a homeowner again. It will take some time before you can get a mortgage. But if you don’t work on the things that need improvement, you may fall into the same pit all over again.
The wisest way to deal with a foreclosure is to take a closer look at the problem and its cause(s). Identify what caused you to fall behind your mortgage payments. Additionally, examine what other factors may have contributed to it.
Was it your budgeting? Was the property too expensive to begin with? Did you choose the wrong home financing program? Or was it your behavior toward debts?
Once you’ve found out the root cause and the precipitating factors, you can start taking steps to fix the problem.Looking for cheap homes? Click here.
Finding a New House
Most foreclosed owners’ biggest barrier is looking for a new place to live in. It’s pretty obvious that buying a new property is impossible as of the moment. The next best option is to rent out.
It is possible to find a house or an apartment with a credit score as low as 580. However, if landlords will find out about the foreclosure, this may scare them.
If you can come up with a solid and acceptable reason for the foreclosure and can back it up with a strong income and employment and/or a sizable rental deposit, most landlords may reconsider.
Indeed, strong job history and substantial rental deposit can be enough proof that even if you’ve been through a foreclosure, you can still manage to pay your rent.
A foreclosure is a very difficult thing to go through. However, there’s no other way but to move on from it wiser. If you’ve been in a foreclosure but are driven to be a homeowner again, here are some tips to make lenders reconsider an offer.
- Work on rebuilding and cleaning your credit. Remember what we’ve discussed earlier: Stay consistent with your payments.
- Show that you have a strong job history.
- Save for a down payment.
- Talk to lenders.
Do not be afraid to phone lenders. Talk to them and learn more about different mortgage programs and how things work. Talking to a lender doesn’t tie you up with them. So, don’t be scared. Allow yourself some time to research and learn. This way, you can plan out your next steps better.
Always remember that a foreclosure isn’t the last nail in the coffin. It will take time to recover from it. If you’re wise enough, you will use that time to become a better homeowner.Click to See the Latest Mortgage Rates»