by Mj Ferruzza

Created on: June 26, 2008

First, let's pin down the reasons why a home goes
into foreclosure. People can say it's the economy,
or a credit crunch or just bad decisions on mortgage
companies. But let's tackle some of the real reasons:

#1 Average income for an American Family: $42,000
Average cost of a home for a family of 3-4: $265,000
This means that more than 60 % of all income is going
into house payments. A job loss, medical catastrophe,

or undue expense puts the mortgage payer at an extreme
disadvantage and delinquency.

#2 Divorce. Since 55% of all marriages end in divorce,
credits can be ruined. And homes usually fall into a
liquidate category. Since monies received from selling
property during or after a divorce is usually split or
ends up in a lawyers pocket, reestablishing credit starts
to become an uphill battle.

#3 Low Mortgages at a Price. Most people did not foresee
interests rates sky rocketing as quick as they did. Their
adjustable mortgages climbed faster than they could pay.

#4 Bad economic times means the government raising taxes
to fund programs. These usually fall into property taxes
or ones on home utilities. When you pay out more than you
can live on, foreclosure is not far off.

#5 You are now a risk.

But there is life after foreclosure. It takes a little hard
work, determination and sacrifice but it does happen.

1. Get a debit card. Do not buy anything on credit.
2. Rent movies from the library instead of movie stores.
3. Buy store brand groceries.
4. Take a second (or third)to pay certain bills and get
them out of the way.
5. Keep your car longer, stay away from car loans.
6. Take on a roommate or become a roommate.
7. Save 10% each month in a high yield account.
8. Stay away from others with more debt than you...
misery loves company, but eagles soar with eagles.
9. Create a budget (stay on it)
10. Create a wish list of what you want...
and what you really need.

Creditors and the banks should not look down on you, because
they in fact created this mess when they took away the
homeowner safety umbrella. They went in front of Congress
and, by use of lobbyists, paid to get rid of bankruptcy. Even
though banks still send out millions of credit card applications
every year, causing more debt and credit tension.

The banks don't want to help you, they want their money and fees.
Creditors want their money. Mortgage companies want their money.
And they all work together to get it from you. You must remember
this when you start to re-establish credit. Don't over extend
even if it means to create your own safety blanket. Remember banks,
the court, even the government can get into your bank account at
anytime. Your best safety net is having assets in things like
collectibles that you can protect on your own.

You can look to try to find ways to buy a new home, but why not lease?
You pay what in effect is rent, but you don't pay property taxes,
repair bills, and sometimes the landlord mows the lawn for you.
You don't build equity, but if you had the tendency to move every few
years, you weren't building much even then. And with so many homes in
foreclosure, the number of these rental homes rise everyday.

Don't get trapped in a rent-to-own. And be wary of buying a foreclosed
house that may come with liens and back taxes. But you can survive a
foreclosure. Millions have. And until the government stops taking lobbyist
payments from the banking industry, millions will do so in the future.
Keep your head up!

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