How to Live After a Foreclosure

Dealing with the aftermath of a foreclosure can be very stressful. Not only will you need to find a new place to live but you will also need to rebuild your credit score and your life. Although it is easy and common for former homeowners to become depressed after a foreclosure, you can get back on your feet and get back on the road to home ownership.

Step 1

Find a rental property that you can easily afford. Although it will take time to get your finances in order, you also need a place to live. Although you may not want to try to fit a family of five into a one-bedroom apartment, you should explore all of your options. Your goal should be to find the property that has the lowest rent yet can still provide the space and other amenities that you need. If you cannot find a rental property, you may need to ask family and friends for help. If they have extra space, consider renting from them or asking them to co-sign on a lease for you. Although it would not be an ideal situation, it may be the only option available to you.

Step 2

Create and adhere to a monthly budget. To get out of the financial hole that a foreclosure can cause, you will need to carefully budget your finances. "Cut corners" where you can and try to start putting some money aside each month in a savings account. The best places to trim costs include entertainment and superfluous purchases. Take this opportunity to try to get caught up on any other bills; it is common to fall behind on other debts when you go through a foreclosure.

Step 3

Open a secured credit card account to begin to rebuild your credit history. You will need to prove that you are a good credit risk and that your foreclosure was an isolated incident beyond your control. Since a credit report does not give lenders that information, be sure to make your payments on time and use your credit wisely to reestablish yourself. If this was not an isolated incident and you have had problems managing your debt, it is best to seek assistance from a credit counselor. A counselor can help you to create a budget that will work with your circumstances and can offer assistance to manage and pay off debt.

Step 4

Wait for the foreclosure to be removed from your credit history. A foreclosure will remain on your credit report for a period of seven to ten years. In many cases, it might take that long for you to be able to purchase another house again. Although there are some options available that will help you get into a home sooner, it is best to remain patient, learn from your mistakes and take this time to build your savings account and improve your credit score.

Step 5

Consider purchasing a seller-financed property. If you do not want to wait seven to ten years to buy another house, and you are able to get your finances in order, a seller-financed property may be an option. Not all sellers will check your credit but you will need a sizable down payment of approximately 10 to 30% to purchase most houses. This type of property will allow you to fulfill your dream of becoming a home owner and might help you to do it sooner than you might think.