Real-estate investor Joe Homs breaks down five steps to rebuild after foreclosure: understand how it happened and the credit timeline, develop better financial habits, repair your credit by paying on time, avoid predatory lenders, and get advice from CPAs and attorneys. Recovery takes time and discipline.
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In today's video, I have 5 steps for surviving a foreclosure. Coming up next. If you've had to handle a housing foreclosure, you know these events can be stressful and financially devastating. Regardless of where you live or when you experience foreclosure, there's no question that it is a difficult experience. The situation may seem hopeless, But you can recover from this type of financial emergency with some dedication and time. Welcome back. I'm Joe Homs. I created this channel for the new and experienced investor, those who want to create the life they've always wanted through real estate. Make sure you tap that like button and subscribe so that you never miss a thing. Step number 1, evaluate your situation and options. So we're talking after you've been foreclosed on. We need to know what that process looked like. Number one, if you entered into a short sale, your credit history will be pretty much not very good for about 3 years. If you decided to file bankruptcy during that time, your credit history is going to take a hit of up to 10 years. So it's very important to find out how you were foreclosed on. So that you know when you're able to jump back in the market. Now remember, lenders are there to lend money. That's how they make money. So the crash that we had 10 to 12 years ago, those were kind of the rules of thumb that they followed. You know, fast forward to today, I know that there's some lenders out there that'll look at a bankruptcy a year later Or even a foreclosure. And they'll go, yeah, you're ready to go. You're ready to loan. So don't be afraid to check early and find out if you're ready in that position to buy another property. Number 2, build healthier financial habits. Okay, yes. Again, 10, 12 years ago when we had the big crash, if you bought at the top of the market, That's— that really wasn't your fault that now your property is worth half. But, you know, let's look at the people that had homes and the values had increased to the point where they refinanced their properties. They pulled that money out of their properties and then the market hit and the downturn came and then they're in financial distress. So make sure when you own a home that you prepare for anything and everything that might come in the future. Step number 3, begin repairing your credit. And repairing your credit is making sure that you're paying your credit cards on time, making sure you pay back any loans that were taken out. All these things are going to repair your credit. And yes, It may take some time for you to get your credit score back up to where the lenders want to see it. Now, they will loan if your credit score is in 600s, but you're going to pay a higher interest rate. When you're up in the 800s, you're going to pay less of an interest rate on a loan that you get from a bank. So that's the difference. So make sure that you check your FICO score at least once a year. There are plenty of apps out there that you can literally check it every day if you like, and most of them are free. Number 4, resist the call from predatory lenders. And they may not even be predatory lenders. They just may be regular bank lenders that are looking to have you refinance the property, give you a second trust deed, refinance your home equity line of credit, whatever it is. You have to be careful. Nothing is free in life. They may offer you something for free. They're going to put all those charges onto the loan and you're going to pay on the back end all those charges. For example, I had my local credit union, which I've had a home equity line of credit since I've owned a house over 40 years. They run for a 10-year period and then they automatically renew. I'm sorry, you have to renew them. Not automatic, but renew them. So I'm 3 years into the 4th one I've had on my property, and the bank calls and they want to know how I'm doing. I said, I'm doing fantastic. I don't know about you guys, but I love the home equity line of credit. I can use that to buy more property, and then when that property closes, I pay myself back. But you have to be disciplined in that way. You can't take that money and go have a fantastic vacation in Hawaii. Because you're gonna have to pay it back. Step 5, reach out for help from the appropriate professionals. CPAs, attorneys, knowledgeable real estate agents are out there and they can help you out tremendously, and most of them are going to help you for free. So make sure that you reach out to these professionals, and not only one, But reach out to several. Make sure that you're getting the correct information from a particular person so that if you reach out to 2 or 3, you're going to get hopefully the same information from all 3, but maybe not. I've broken down surviving housing foreclosure, picking up the pieces and moving on to future homeownership in 5 basic steps. With a little dedication, you'll be able to start your investing journey again. If you're new to investing and want to know why real estate may be the best way to create generational wealth, click on this video right here. And as always, if you have any questions, feel free to reach out. I'm here to help.
