What I learned from my home foreclosure

In 2006 I walked away from my first home and by the end of the year theforeclosure process was well underway. Unlike many families at the beginning of the housing bubble collapse, I didn’t lose my home because I over purchased or because I lost of my job. I lost my house as a side effect of a divorce.

I won’t go into details about my divorce aside from saying it was a surprise to me that came out of nowhere, one day I was married with a 2-year-old child, and 3 days later I was alone in my home. It was the worst possible scenario and I was completely unprepared financially for such a catastrophic event. But, I learned from the experience and attribute my positive financial state that I am in today to my homes foreclosure.

Selling my home outright proved impossible, with the market rapidly declining from 2006 into 2007 finding a buyer was just not happening. I was running out of time, I had moved out of the home to be closer to my daughter and was no longer able to afford my new rent and the mortgage.

One lesson learned was the inner workings of a short sale, its process and unfortunately in my case I a few reasons why short sales can be declined. Two contributing factors in my scenario; first, I could afford my mortgage payments and was unable to prove a substantial enough financial hardship, the second and probably a lesser reason which I feel I could have worked around was that the home needed to be occupied by me at that time.

Losing my home 5 years ago has given me a better appreciation for my own personal finances. It has forced me to work hard at managing and rebuilding my credit and shown me how important being financially knowledgeable is. I attribute my drive to build a healthy emergency fund and retirement fund to the loss of my home.

I discovered what a true financial emergency was, which has helped me prepare for and in some cases avoid potentially disastrous financial situations. I also learned that you cannot foresee every pit-fall that you are running towards, but with the proper knowledge that pit-fall can become just a stumble that is easily overcome.

I am sometimes asked if I would do things differently in how I handled my house; it’s a difficult question. I would like to say I would have stayed in my home until I was able to sell it or that I would have fought my bank harder for a short sale, but both choices come with consequences that I was unwilling to accept. I am not saying I made the right decisions, but I learned from decisions I did make and have become more financially aware because of them.