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April 13, 2015

How to Recover After a Foreclosure

Between 2006-2010, the US saw a drastic, record-breaking increase in foreclosure rates. A CNN Money report cited 861,664 families lost homes to foreclosure in 2008 alone. This was a small percentage of the 3.1 million foreclosure fillings issued during that year.

To say we suffered a housing crisis doesn’t cover the enormity of the situation.

But the first quarter of 2015 brings us hope. Foreclosure rates have dropped to pre-2006 levels. Home prices continue to increase. Together, we are starting to rebuild.

If you are one of the countless families affected by foreclosures, here are 3 steps to help you recover:

Priorities First

The most important step is finding new housing.

Most people turn to renting. This can be a challenge because potential landlords will pull a credit report.  Honesty is the best policy. Be up front about your circumstances from the get-go. Explain how you won’t have a problem making rent on time. It’s not uncommon for rent prices to be less than a mortgage. Use the lower rent price to support your case.

Other elements that can work in your favor include:

  • Showcasing a positive payment history for other bills (car, utilities or loans);
  • Offering to increase, or even double, the deposit;
  • Having someone co-sign the lease.

Many have found individual landlords to be more lenient than property management companies. It may take time to find a landlord willing to overlook a foreclosure. 

If you need help finding housing, contact the Virtual Counselor Network today. Together we can help you find transitional housing.

Rebuilding is a Process

The process after a foreclosure will be a rebuilding process. There will be both an emotional and financial toll. Allow yourself time to recover, seeking a supportive network to help with the recovery.

Most importantly, know there is hope.

The majority of people who go through a foreclosure will own again. But it will take time. Each mortgage loan type will require a waiting period before approving a loan with a foreclosure on record. These waiting periods can range from one year to seven years.

Use this time to pay down debt, work on savings and rebuild credit. This starts with a spending and savings plan. Outline all your expenses each month. Prioritize the necessities: housing, food and transportation. Compare this against how much money you make each month. Then, allocate the left over money to other bills, debt and upcoming expenses.

In addition to paying all your bills, work to save up an emergency fund. This will be a safety net to protect against the unexpected.

As you work through a monthly spending plan, your credit will begin to heal. The more positive interactions you have with it, such as paying bills on time, the less your foreclosure will impact it. Learn more about improving your credit score.

Get Help 

Know you are not alone. There are countless nonprofits and organizations here to help you rebuild, both financially and emotionally.

From assisting you to find housing to helping you rebuild credit to setting up a good financial base and more, there is help! With foreclosures reaching an all-time high in 2006-2010, more and more organizations dedicated resources to assisting families with navigating the process and aftermath. Let them help you.

To get connected with a FREE foreclosure counselor, contact the Virtual Counselor Network. Our goal is to help you succeed through all of life’s transitions.