Even though the housing market is beginning to turn around, foreclosures are still all too common to many individuals.  For working class families few things can be more devastating than losing one’s home, as so many memories and one’s sense of security can be tied to a house.  There are few clear steps to follow after a foreclosure, as the road to financial recovery is both long and difficult.  There are both short term and long term decisions and considerations to be made after a foreclosure, making a solid game plan a necessity, and professional financial device incredibly valuable.

The first major obstacle created by foreclosure is a large drop in one’s credit score, often by 200 points or more.  How large the drop is depends on the nature of one’s foreclosure, namely how far behind they fell in payments before foreclosure and whether other debts or credit lines were kept current despite the foreclosure.  Such a deep credit hit will make borrowing money or getting a loan nearly impossible, and individuals must work diligently to get this score back up to a respectable level.  Since this can be a very lengthy process, a more sound strategy is for individuals to focus on building up a savings account instead of their credit score.

When layoffs, medical emergencies, or other unexpected events cause a foreclosure, individuals generally have an easier time bouncing back, as they are used to living with a balanced family budget.  For those who lose their homes due to fiscal irresponsibility, financial recovery can be even more difficult.  In these cases a strict and detailed monthly savings plan is an absolute necessity.  Many individuals in this situation are still spending the entirety of their income on bills and basic expenses.  However these individuals should not view a savings plan as optional.  A second job for extra income or major downsizing should be the next options, so that those who have already faced foreclosure can give themselves a legitimate amount of savings. Without such savings, these individuals will be unable to handle any other financial troubles that may befall them and will end up in the same difficult position as before.

For those set on improving their credit score and getting another mortgage, there are ways to make it happen.  The most important aspect of these is discipline.  Individuals will be facing a difficult financial situation yet again, a situation that resulted in foreclosure the first time around.  This means that individuals must be extra diligent to pay every single bill on time and not open any more credit lines.  While this is happening, it is recommended that individuals take the time to go through all financial statements and debts with a fine-tooth comb looking for any inaccuracies or misrepresented information.  By disputing these areas individuals have the ability to slowly make the drop in their credit score less drastic, even though it will result in little change to their actual financial situation.

During such a trying time, it is very easy to get discouraged and angry at one’s former financial mistakes, but trying to approach the situation with a positive attitude can work wonders.  Individuals are advised to view foreclosure as a chance to start over in many ways, and an opportunity to restructure one’s lifestyle around what is truly important.  By eliminating excess spending and unnecessary extravagances individuals can find the joy in life’s simple pleasures and realize that a happy home has very little to do with the size of the house.