How to Start Over After a Foreclosure

If you have recently gone through foreclosure, you need a plan of action. I am writing this to hopefully give you a start for this without all the legal fees.

Difficulty: Moderately Challenging

Instructions

1. 

   The most important step is to make sure that the foreclosure process is complete. Most people think that it stops when the house is taken back by the bank and that is the furthest from the truth. You have to make sure that the foreclosure has been satisfied. This means that the property has been resold.

2. 

   In the case of purchasing a new home after foreclosure, there are two routes to go. The first is going to be conventional and the second is through FHA. Conventional looks at the date of the foreclosure and FHA looks at the date of the satisfaction.

3. 

   Now, once the process is complete, it is time to get your finances and credit back in order. The first and foremost thing is to make a budget and live within the means that you have. When making a budget, take into consideration what you would make in each month. If you are a commissioned employee, use the low end. If you work a lot of over time, figure the budget with limited OT. If the OT dries up, at least your budget does not.

4. 

   Setting a budget means not going over it. The first point of a budget is housing. Make sure that you calculate enough for rent and all utilities. Once that is in, make sure that it does not exceed 25% of your income. This way, rent and utilities can be paid with one check. Next, you want to budget for your automobiles. This means payments, insurance, and gas all need to be calculated. Then move on to the food and make sure that you add in for eating out. Go through this whole process until you have covered all the bills that you could possibly have. Make sure that you set aside an amount of money per paycheck for you.

5. 

   Once the budget is made, live within the means of this budget. Make sure that you pay all your bills on time and keep your credit cards to a maximum charge of 33% so that you can keep your scores high. After 3 years, you should be back in the market for home ownership.

Tips & Warnings

• eat out less
• only buy things on credit that you can pay off each month.
• Be careful of high interest rate credit cards.
• Manage your money closely.

[Petula]

on 8/10/2009 This article is easy to understand and well written. I really hope I don't need to refer to it in the future. :)

[adecesare]

on 4/16/2009 Fantastic and sensible. Just what foreclosed homeowners need.

[Susang6]

on 2/5/2009 great article with very useful tips. 5*

[bar10dr98]

on 11/21/2008 Very helpful advice for many people in today's economy. Thank you!!

[vallain]

on 9/15/2008 I don't understand the part about the 33% on the credit cards. Does that mean don't charge more than 1/3 of the credit available? Don't charge them up to the max?