Financial and Emotional Recovery from Foreclosure
The financial implications of facing a foreclosure can be overwhelming on their own, but there are affects on your mental health. Below is a basic guide in dealing with both types of adversities when facing a foreclosure.
Foreclosure and Your Feelings:
Opening a foreclosure letter might as well be like opening the flood gates of your emotions. One may experience anger, guilt, shame, and a strong sense of overwhelment. Where to begin!?
The most important thing to remember right away, is that you do have options (consult an educated real estate professional for more information). Secondly, you must remember not to act hastily as a result of your emotions. Whatever your options may be, try sleeping on them first. Once some time has lapsed, it is likely that your emotions will be more under control, enabling you to make a more calculated decision.
Many people become consumed by worry when they’re facing a foreclosure. Worrying in this situation, as it is in most situations, is pretty much useless. Instead of spiraling into a cycle of imagining worst-case scenarios, or what might happen next, use that worry as a cue to get organized with your thoughts. Write down your concerns, what actions should be performed, prioritize them, and then take action. This task may not make the seriousness of the problem go away, but it will give you a little more control over things.
Although foreclosure can cause shame and embarrassment, realize that you are not alone. There are millions of people in the U.S. going through the same thing. In fact, there are so many people struggling with a foreclosure that many resources have been established to help distressed homeowners. I’ve done part of the work for you by locating some trustworthy organizations in the Sacramento area. Click here for a helpful list. Also, never underestimate the relief that a supportive friend, family member, coworker, or fellow church member can provide. If you’re really struggling emotionally from this difficult time, don’t try and go it alone!
The Road to Financial Recovery:
As many people know, a foreclosure can be devastating to your credit. However, it is NOT impossible to recover from financially. Once you’re settled into a new home (presumably a rental or with a friend or family member), make sure you stay on top of managing your current debt. Unfortunately, it is quite often the case that the sell of your foreclosed home did not generate enough money to cover your loan and you’ll still owe an amount to the lender. If you have other debts on top of the home loan, it is highly recommended that you seek professional financial advice (refer back to the link posted above for resources in this area).
Also, check your credit report for any errors. If you do see errors, then report them immediately. By law, they must be taken off your report if they cannot be proven. You’re entitled to one free credit report per year. Annualcreditreport.com is the only site backed by the federal government. Click here for more information.
Another way to improve your credit is to rebuild it. A foreclosure is not a good mark to have on your credit report and it will remain there for 7 years, but some creditors are more concerned with your overall score than they are with individual marks. You might have luck applying for a secured credit card (where you provide a deposit upfront). Once you obtain a new line of credit, use it on small purchases and on a regular basis, be sure to pay the bill on time, and watch your credit improve.
If you want to fully turn things around financially, do not consider homeownership again for at least a couple of years after your foreclosure. According to debthelp.com, your credit score will need to be around 680 in able to get a home loan from a traditional lender. It’s possible to get a loan from a sub-prime lender if your score is lower, but the terms will be much more strict, and the interest rate will be higher.
Courtesy of debthelp.com, www.frbsf.org, and www.hud.gov
Whether you’re a buyer, a seller, or one of the millions currently trying to avoid foreclosure, Angel Lynn Realty is your trusted source for buying a home and your understanding expert in the short sale process.
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