Many people are affected by foreclosure and this could be something that deal them a major blow. Foreclosure feels insurmountable and overwhelming. Many people think that their lives are over and they will get to own a house. Proper strategy and planning would be needed to deal with this financial dilemma. It may take a number of years before we are able to get our credit situation on track. It could be a struggle before we reach a situation when we could purchase another house at normal interest rate. Before we do this, it is important to figure out why we were affected by foreclosure. Legal loss, job loss, divorce and medical issues could cause us to have problems with mortgage payments. It is lucky if we still have a job to cover our payments, but in many cases we barely have a source of income. In this situation, as part of an emergency measure, we should look for a different job. If we still have reliable sources of income; it would be a good idea if we are able to put together a budget. We don’t need to purchase a dedicated accounting or budgeting software. A standard spreadsheet software like Excel could also help us create a budget plan.
If we don’t have a spreadsheet software, it would be costly to buy a full-fledged Microsoft Office. Alternatively, the completely free Open Office could provide nearly similar capability. After we have set up a proper budget, we should be able to determine how much money that we can save.
It’s the time when we implement the 80/20 rule. It means that whatever leftover we have, 80 percent of the mortgage should be allocated to the savings account, which will be used for mortgage down payment. Then we should put the other 20 percent into separate account, which can be used to negotiate with the creditor.
It’s important to obtain a copy of our credit report. Major credit reporting agencies will provide us free annual credit report. We should know if we are late in paying bills and loan payments, credit scores will be affected. After we obtain the credit report sheet, we should make sure that all information is perfectly accurate. In this case, we should check the most recent debt and it’s important that everything is mentioned properly. If we have paid regularly, we should make sure that it’s also mentioned in credit score. Any debt that has been paid in full should also be properly mentioned in the sheet. Any inaccuracy could cause lower credit score and if it happens, we should dispute that. After we settle all debts; it is important to know that we shouldn’t make sure our condition worse. As an example, we could be encouraged to open a new credit card or two. It’s an easy thing to do, because after our mortgage is paid off; our credit score will be restored and we have enough excess money to pay for any credit card debt. However, we shouldn’t be tempted by this condition to re-create the past financial havoc.
