Living after Foreclosure

Posted on July 17th, 2008 by saman

Unfortunately, foreclosure is becoming an unfortunate reality for many. There are times that foreclosure cannot be avoided and you must leave your home. Be assured that there is life after foreclosure and you will be able to get your life back together.

Trying to make it after foreclosure may seem like an impossible thing to do. A foreclosure will affect your credit report but you can get re-established. If you have been a victim of a subprime mortgage and that has caused you to lose your home, there is a way to recover from this quickly. Whenever you have something negative on your credit report it will remain on the report for seven years. However, there are some things that you do to recover from your financial problems. By implementing good financial management steps you can find your way back to financial security.

It will be at least three years after a foreclosure before you are able to buy a home once again. Conventional and FHA loans have a three year requirement before they will let you get financing for a home. By taking a few steps, you will be able to improve your credit.

First, make sure that you do not pay any more of your debts late. Late payments harm your credit.

Next, be sure that you maintain at a minimum of three lines of credit on your report. This may be a few secured credit cards, installment loans, car loans, or unsecured credit cards.

It is also important that you have a spotless rental history. Be sure not to be late on your rent payments. This is important when you want to buy a new house three years down the line. You should also try and make sure that your rent is close to what you would pay on a new mortgage. The reason for this is that if you are ready to buy a house and your rent payment was four hundred or five hundred dollars less than your new mortgage, the bank will see this as payment shock.

Be sure to save your money when trying to fix your finances and prepare for a new home. You need to have at least six months of mortgage payments in your savings account. The banks will look at this as proof that you are able to save money.

The most important thing when trying to get back on your feet after a foreclosure is to be sure that you do not make the same mistakes. Fair Isaac, the originator of the FICO score may forgive the mistakes you made with your credit but FICO 08 may not be as forgiving. FICO 08 does not forgive repeat offenders so be sure to learn from your mistakes and move on.

Many things come up as we pass through this life on earth but we can make life’s journey a little easier by learning to manage our credit. If you are not a wealthy person, there may be times when you will have to borrow money. It can be rather daunting to need and loan and not be able to get one because you have bad credit. However, by being a little more prudent with financial matters it will not be long before your financial picture looks much brighter.