5 Steps to Owning a Home Again After Foreclosure

Foreclosure is just a one-time event, albeit a potentially catastrophic one. However, with discipline and perseverance, you can get a mortgage and become a homeowner again.

It won’t be easy to obtain a mortgage after foreclosure. But with enough time, discipline, and desire, you can own your own home again. Here’s what you need to do:

1. Stick with a job after foreclosure Did you fall into foreclosure because of the lack of a steady job? If you did, the first step toward homeownership after foreclosure is finding and holding one. And if you already have one–stick with it, unless you can move to a better one. Note that potential lenders will require stable employment before they’ll give you a new mortgage loan after a foreclosure. Even if it means taking a lower-paying job, it’s worth it.

2. Rebuild your nest egg after foreclosure Establish a safety net. Financial planners generally recommend three to six months of living expenses in a liquid account, but since you’re coming out of foreclosure, six is a minimum to show stability and that you’re able to pay your bills–including your mortgage–for an extended period if you lose your job.

3. Raise your credit score after foreclosure This is the hardest and most time-consuming part. After foreclosure, your credit score, according to myFICO, probably dropped by about 150 points. You’ll need to raise it back up with perseverance.

Pay bills on time and keep your credit card balances below maximum levels. The foreclosure will stay on your credit report for seven years, but if you prove your money management skills have matured, it will become less of a red mark as years go by.

Tip: Consult a housing counselor. The U.S. Department of Housing and Urban Development (HUD) offers free housing counseling for distressed homeowners with a foreclosure in their past. A counselor can help you with money management and budgeting. Counseling works — an evaluation of a program in Indianapolis discovered that credit scores greatly improved because of education and counseling, and increased average borrowing power by $4,500 per family.

4. Reduce your waiting time for a mortgage after foreclosure Normally, you would have to wait seven years after foreclosure before you can apply for a new mortgage under Fannie Mae rules. Note: Fannie Mae changes rules frequently. You can check the latest rules at Fannie Mae’s site.

However, you might wait only three years if you can show extenuating circumstances for your foreclosure, which are defined as ‘events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations’…”

Thanks Linda Kemp for the information.

Give me a call to discuss your situation and see if we may have other options to help you buy a home.

5 Factors that Effect Your credit

MyFico.com has shared information regarding the credit scoring model. Consider these five factors when trying to improve your credit.

Payment History has a 35% impact. Paying debt on time and in full has a positive impact, and late payments, judgments and charge-offs have a negative impact.


For the full Article click the attached link: 5 Factors that effect your credit

Save Your Home from Foreclosure

During a housing market and financial crisis, there are always a certain percentage of homeowners who are under tremendous stress and fall behind on their mortgage payment.

Did you know that despite the odds, there are options that may save your home from foreclosure.

One in ten households are behind at least one mortgage payment, and it is estimated that more than two million homes have gone to foreclosure since the downturn began. Seven of these ten will, more than likely, proceed to foreclosure without assistance or help from a real estate professional or their mortgage representative.

Some options available are:

Reinstatement – homeowner is required to pay all missed payments, late fees, and any other fees incurred up to the date that the loan is reinstated.

Forbearance / Repayment Plan – the lender allows the homeowner to pay the missed amount over a period of time, or places the missed payments and fees at the end of the loan.

Mortgage Modification – the lender allows the interest rate on the loan to be lowered to lower the monthly payments.

Deed-in-lieu of Foreclosure – sometimes referred to as a friendly foreclosure, the homeowner essentially gives the deed back to the lender.

Bankruptcy – in most cases, bankruptcy can stop the foreclosure and give the homeowner time to reorganize their debt in an effort to keep their property.

SCRA – Service members Civil Relief Act – provides certain protections to military personnel who are in foreclosure in specific conditions.

Sell –the homeowner can sell the property to prevent foreclosure, whether or not there is equity in the home. If the homeowner owes more than the current market value of the home, the lender may allow the homeowner to sell through a ‘Short Sale’.

Understanding your options is the first step to avoiding foreclosure. Contact your lender and ask for all the options available to you to avoid foreclosure. They are also your best resource in avoiding a mortgage scam. Should selling your home be the best option for you, give me a call to help you make the process as easy as possible.

Rate Reduction for Military

The Servicemembers Civil Relief Act provides members of the military with special protection that caps the interest rate on their credit cards, mortgages and other loans at 6% while they are on active duty. To be eligible for the interest limits, you must have incurred the debts before you entered active duty, and your military service must affect your ability to repay them. Although people who took a pay cut to join the military can benefit from the law, it is most helpful for members of the Reserves and National Guard, who often must leave higher-paying civilian jobs for months, or even years, when called up. (Credit cards, mortgages and other loans taken out jointly with a non-military spouse also qualify for the rate reduction.)

For the full article click the link:  Rate Reduction for Military

How to Live within Your Means?

Start by creating a budget and sticking to it. Here's how.

My 6-year-old daughter was listening this morning as my husband told me about a nearly $600 million school that was built in Los Angeles. He had read about it in the New York Times and was shocked by the cost, in large part, because Los Angeles has serious budget troubles. He then asked my daughter, "Would you buy something if you didn't have the money to pay for it?" She answered no and said she knew that as early as age 2.

For the full article click the link:   Creating the Budget

Video Five Easy ways to budget.



Household Budget Worksheet

Get on top of your monthly living costs by projecting expenditures in various categories, and then comparing those projections to what you actually spend.

What happens if you default on a student loan?

Americans now owe more on student loans than credit cards. Given the nation's high unemployment rate and slow economic recovery, it's not surprising that the default rate on student loans also is up. (The default rate for students who entered repayment between fiscal years 2006 and 2007 was 6.7%, the highest since 1998.)

There are ways to ease the burden of student loans. But if you've already starting missing payments and are in default (or expect to go into default soon), Jane Bennett Clark offers these strategies in the upcoming October issue of Kiplinger's Personal Finance:

Miss a single payment on a private student loan and you will go into default. Miss a few federal-loan payments and you will get dunning phone calls, but you won't go into default until after you have fallen 270 days behind schedule. Once that happens, the feds can demand immediate repayment of the full balance of the loan and wring payments from you by offsetting tax refunds and garnishing wages. Don't think Uncle Sam will drop the matter. The feds can and will stalk you indefinitly.

For the Full Article click the link:  Default on a student loan?   

Ease the Burden on Your Student Loans -

The last thing you want to do is default on your loans, which will hurt your credit score, make you ineligible for future federal student loans and may prompt the government to seize your wages (when you get a job) and tax refunds. Instead, explore the various loan-deferment and forgiveness programs.

You'll have more options if you have a federal student loan. You're entitled to a deferment (temporary suspendions of payments) if you can't find a full-time job or experience economic hardship. FinAid.org has a calculator to help determine whether you'll qualify for deferment.

For the full article click the link:   Ease the Burden

New ID theft targets kids' SS numbers

The latest form of identity theft doesn't depend on stealing your Social Security number. Now thieves are targeting your kid's number long before the little one even has a bank account.

Hundreds of online businesses are using computers to find dormant Social Security numbers — usually those assigned to children who don't use them — then selling those numbers under another name to help people establish phony credit and run up huge debts they will never pay off.

Authorities say the scheme could pose a new threat to the nation's credit system. Because the numbers exist in a legal gray area, federal investigators have not figured out a way to prosecute the people involved.


Click the link for the full article: Theft targets kids' SS numbers

How Does a Foreclosure or Short Sale Effect my Credit?

I am often asked how does a short sale or foreclosure will impact someone's credit score. A new report from syndicated writer Kenneth Harney now reveals the damage.

Before we go further, please note that these figures below are compiled based on your Vantage credit score. The Vantage score is a fake score manufactured by the three main credit bureaus -- Equifax, Experian and TransUnion. It is not the official score used by most lenders. Yet it still give you a good indication of what to expect with your true credit score.

• A short sale will ding your credit score by 120-130 points.•

For the full article click the link: Foreclosure or Short Sale

Free Credit Report

Don't fall for sites that offer "free" credit reports, which often end up enrolling you in expensive credit-monitoring programs that you usually don't need. You can get a free copy of your credit report from each of the three credit bureaus (Experian, Equifax and TransUnion) once every 12 months at www.annualcreditreport.com. It's a good idea to stagger your reports -- getting a free one from each bureau every four months -- to keep an eye on the status of your credit and spot potential ID theft throughout the year.

5 Warning signs that you may be in financial trouble

Here are five early-warning signs of credit troubles that could make it a good time to get help from a credit-counseling agency -- or at least make some major changes in your spending habits.

1. Paying only the minimum amount due on your credit-card balances for two months in a row. Paying just the minimum kills you with interest charges and can extend your debt for more than a decade. If you have a $1,000 balance on a card that charges 18% interest, for example, and you pay the minimum of 2% of your balance each month, it would take 19 years for you to pay off the debt and cost nearly $2,000 extra in interest (twice as much in interest as you owed for the original balance). Many lenders have been boosting their minimum payments from 2% to 4% or 5%. But that could be tough to pay on time if you aren't prepared, leaving you with late fees, a higher interest rate and a lower credit score -- and making it even tougher to get out of debt.

For the full article click the link: 5 Warning signs that you may be in financial trouble