It might not look like it just now, but life does go on. What you need to do immediately after you face foreclosure is to get a hold of yourself and make a ‘to do’ list. With some effort you will be able to struggle out of this one, too. Do not kid yourself that it is easy; it is not. However, it is not impossible and therefore, it can be done. Let us check what options you have:
Foreclosure Is Not The End Of The Road – Treat It As Lesson
- Keep your cool and do not despair – Whenever you feel there is a hopeless situation, look around for ways out and you will always find an alternative. The most important thing when your home is foreclosed is to look back and see where things went wrong. The unbudgeted expenditure could be a forced one (like medical problems in the family and the like) or it could be simply wrong calculation of the future payments as presented by the lender organization itself. Whatever it is you need to find it out the reason you are in this trouble today.
- Avoid Foreclosure Rescue Scams – though to a desperate person this would seem like manna from heavens do not go for any such companies that proclaim they can lend you money to stall the foreclosure and then thrust you deeper into debt. Understand the terms and conditions before even considering such a bail offer.
- Call the lender organization and ask for ‘loss-mitigation’ options. These are ways to re-negotiate the terms of the loan in such a manner that you could be able to make payment and stay off the red. A good majority of organizations would listen and try to work out mutually suitable new terms and conditions rather than foreclose.
- Contact a housing counselor – these people are qualified and experienced in these matters and they are legally empowered to appeal on your behalf with the lender organization. Try them out.
- Contact a lawyer – it is possible that you are in this mess because the lender failed to represent the conditions correctly or because they approved the loan when it was obvious that the payments would not be sustainable in the long run. In this case you would be entitled not only relief but also damages.
- Bankruptcy could be an emergency exit – filing for bankruptcy can save you; however, you would find on the ‘risk’ list for 7-10 years after that. Therefore, be careful to use this option only when there is no other go.
Credit Repair Can Take You To The Top Again
- Start saving – from day one after your home has foreclosed you need to take concrete steps towards financial discipline. You need to save whatever you can from your income. Ideally everybody should save about 15% of their income for the ‘rainy days’ but anything would do. Savings are also a great ally when you apply later on for a loan or mortgage.
- Clean up your credit – this is easier said than done, but again it needs to be done. This is the first step you would take towards reclaiming your home if at all that is what you aim at; or buying another one. This can be done with great care and patience:
- Check your credit report for mistakes – run carefully with a fine tooth comb through your credit record and check whether there are any anomalies there. If yes, immediately write to the respective bureaus and request that the wrong entry(ies) by removed. Be careful you write a separate letter for each mistake you encounter or you would risk the bureau checking and correcting only the first one.
- Get at least one major credit card – try your best to apply for a credit card. If you have one (or more) do ensure that your payment cycle is impeccable. If you do not have or have difficulty in getting one, try a secured credit card. The aim here is to show that you can repay your bills in time and hence, raise your credit points.
- Have a good income to expenditure ratio – your bill payments should not exceed one third of your income.
- Save, save, save – the best way to erase negative history is by establishing a positive credit one. There is nothing better than savings in this. The more you save, the more “less risky” you would seem to your prospecting lenders.
- Re-applying for a new mortgage – the above steps would involve something about one year of stringent living. If you are diligent and keep at it, by the end of the year you would have been able to raise your credit by some 100 points or more which would entitle you to some good mortgage rates.
Continuing with a good financial plan which definitely includes savings, would ensure that you would never have to worry about foreclosure again. You can start by saving money using online coupons from Groupon. You can find deals from various stores, such as Best Buy, Amazon and Namecheap.