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SALT LAKE CITY — The battle was well-fought. You used every resource in the book. You worked overtime or got a second job. You negotiated more time and different terms. But in the end, the bank foreclosed on your home.
Research from the American Psychological Association found that 76 percent of Americans say money is a significant cause of stress and worry. Those who suffer the loss of a home may find that while the property loss hurts, the hit they take to their self-esteem hurts even more.
"I was so embarrassed about losing my home that I couldn't tell my family," said a Utah resident who would prefer not to share his name. "I felt I had failed as a person."
- Pay attention, but don't panic
- Take stock and make a plan
- Recognize how you deal with stress
- Use it as an opportunity for growth and change
- Talk to a professional
Information: American Psychological Association
However, he was most likely not alone in feeling this way. As the New York Times reports, roughly 4 million families have lost their homes to foreclosure between the beginning of 2007 and early 2012. The good news is that according to RealtyTrac Inc., Utah foreclosures declined this July by 76 percent compared to the previous year.
The APA recommends those experiencing extreme financial stress cope with it by creating a well-thought-out financial plan that focuses on recovery. Life after foreclosure may seem difficult, but when handled properly, many families find themselves in a better position than before.
The first step to recovering from a foreclosure is to learn the facts. Many Utahns don't realize that they are eligible to purchase a home again just three years after a foreclosure. In fact, they may begin their home search before the three-year mark, but the closing date must fall after this milestone is reached.
According to the U.S. Department of Housing and Urban Development, also known as HUD, a first-time homebuyer is defined as "an individual who has had no ownership in a principal residence during the three-year period ending on the date of purchase of the property." This is great news, because it means that following a foreclosure, an individual may qualify for first-time homebuyer resources like no-money-down programs or city and county grants to assist with the down payment.
(Underwriters) really want to see that the situation has turned around and you are now creditworthy again.
–- Russ Wheelright, loan officer
It's also helpful for some families to learn that if only one spouse was on the foreclosed home loan, then the other spouse might be able to purchase immediately. If income is an issue, then a cosigner may be able to help secure funding. Or, if credit is messy, steps can be taken to repair it within a few months.
A common mistake following a financial crisis, like a home loss, is to operate on a cash-only basis. Not using credit accounts, such as car loans or credit cards, will cause your credit score to drop. If you have difficulty obtaining a line of credit, CNN Money suggests the following credit card companies are "superheroes" for helping individuals obtain credit: Capital One Secure MasterCard, Orchard Bank, DCU Visa Platinum, Navy Federal (for military), Capital One Newcomers, USAA Secure (for military), American Express Prepaid, Citi Secure and AccountNow Prepaid.
Just be careful to make payments on time. A missed payment may make you ineligible for a home loan.
“Even if you wait the appropriate time, according to the Federal Housing Administration, if a person has a bankruptcy or foreclosure, then underwriters may turn down the loan if one payment is late,” said Russ Wheelwright, a loan officer specializing in first-time home buying and credit repair for Security National Mortgage. “They really want to see that the situation has turned around and you are now creditworthy again.”
The Great Recession has forced many Utah families to face hard times brought on by income insecurity or financial loss. However, there are many tools that can aid in a strong, confident recovery. Through careful planning, even those who have faced foreclosure can rebuild to create a more stable life than before.
Jerome Bennett, a real estate agent, has been helping people find their home in Salt Lake County for more than 12 years. For more information, contact jerome@thejeromeshow.com, call (801)913-1385 or visit www.facebook.com/TheJeromeShow.
