According to the National Association of Realtors, 9.3 million homeowners lost a home between 2006 and 2014, which was largely tied to the infamous Housing Market Crash of 2007. Since then, real estate and banking loan policies have tightened up to prevent another housing crash, but there’s no question that foreclosure and short sales are devastating losses still happening today. Currently, there are nearly 1 million properties in the United States in a state of foreclosure.
Foreclosure and short sales happen for all kinds of reasons – a job loss, rising unemployment rates, rate reset, or accumulating debt. No matter how it happens, it can be a traumatic experience for individuals and families as they wonder if they’ll be homeowners again, or be able to fix their credit after such a hit.
Fortunately, you can overcome the aftereffects of losing your home. It will require patience, adjusting your spending and saving habits, and confidence in yourself as you work to become a homeowner again. Here are 6 tips to bouncing back:
1. Be Realistic
Owning property is a valuable asset. Therefore, it will require time and patience to re-establish your credit and your ability to take control of your finances. In previous years, it could take up to 7 years to get a loan for your home depending on your circumstance. Today, Fannie Mae’s waiting period is 2 to 3 years, and the Federal Housing Administration is 3 years.
2. Evaluate Your Spending Habits
There’s a reason you couldn’t pay off your mortgage in time. Take a good, hard look at your spending habits by reviewing your bank statements. Decipher the necessities (bills, car payments, insurance, etc), and see how you can cut down on less crucial expenses.
3. Buckle Down On Your Savings Strategy
Having a sound savings strategy will not only save you money – it will save you stress and time in the future. If your job offers a 401k, a Roth, or stock options, set them up now. Store away your tax refunds and bonuses, and set up an automatic deposit into a special savings account. It could be just $50 a month, but over time, you’ll develop interest and won’t even realize how much you saved until you need it.
4. Don’t Fall For Scams
It’s easy to feel desperate if you’ve experienced a foreclosure or short sale, which makes you an easy target for predatory lenders and loans that sound too good to be true. Beware of zero-down payment offers and deals that sound too good to be true – they probably are.
5. Boost Your Credit Score Slowly, But Surely
Your credit score is often the make or break factor in determining whether you can buy a home again. Foreclosures can damage your credit score by up to 200 points, which is a huge loss. You’re eligible for a free credit report every year from the national credit bureaus: Experian, Equifax, and TransUnion. See what debts you owe, and work to pay them off. A late bill is better than one not paid at all. Apply for new credits that you can start establishing consistent credit payments.
Jodi Bakst, a Senior Residential Specialist and Broker Owner of Real Estate Experts based in Chapel Hill, NC, understands the housing needs of seniors and is trained to help them through their transition
August 24, 2016