How to Handle your Foreclosure
Foreclosure can be very difficult on people and families. Some people find themselves unable to pay their mortgages due to job loss. Others could afford the payments, but mismanaged their money. Others took out loans they simply could not afford to repay.
While feeling sorry for yourself is very tempting, there are some steps you can take to pick up the pieces.
• Find a place to live – Do this immediately. You do not want to be homeless. A good starting point would be finding a quality realtor. Since you probably could not afford your mortgage payments, you should probably find a place where rent is significantly lower than your mortgage payment. While the housing bubble is causing foreclosures to be processed more slowly than a few years ago, you will eventually have to leave.
• Make a list of your debts – Foreclosure will damage your credit rating. You probably will not be able to get another mortgage for a while. To limit the damage, make a list of all your debts and make a realistic plan to pay them off. If you rent a place that costs less than your home did, you should have some additional money for this purpose. If necessary, seek help from a non-profit credit counseling agency.
• Examine your credit report – You have a right to a free credit report every year from Experian, Equifax and TransUnion. Examine each report for errors and dispute any that you find. Once again, foreclosure will damage your credit rating. Try to limit the damage as much as possible.
• Establish an emergency fund – Emergencies are a part of life. You don’t want to have to go into debt to handle emergencies. Put the fund into an interest-earning savings account. Many employers allow you to automatically have money deducted from your paycheck and put into a savings account. Take advantage of this if your employer offers it.
• Learn from the experience – If you mismanaged your money, learn to manage it better. If you lost your job, try hard to make yourself indispensable once you find a new one. If you took out a loan you couldn’t afford, be more careful before taking out another one. If you eventually buy another home, be realistic about what you can afford.
Foreclosure can be devastating and feeling depressed for a little while is okay. However, life goes on. You need to know how to recover.