We all know the financial repercussions of a home foreclosure—a damaged credit score, higher security deposits, a tarnished record. But these aren’t the only effects. Going through a home foreclosure also takes a toll on your emotional health, which can extend beyond the fear of being put out on the street. You’ll experience a wide range of emotions from denial to embarrassment, and it can be difficult to shake these feelings and move on with your life.
A home foreclosure is nobody’s dream scenario, so you're allowed to feel any emotion that comes with this situation. But while it’s absolutely normal to go through a grieving process, you shouldn't let anger, depression or embarrassment control you.
You can recover both financially and emotionally. The financial recovery part takes time and you’ll have to be patient, but there’s plenty you can do to overcome the emotional effects of a foreclosure now.
1. Stop blaming yourself
Some people lose homes because they purchased more house than they could afford and got in over their heads, whereas others go through a foreclosure after a job loss or divorce. At this point, it doesn’t matter the underlying cause, or whether the foreclosure was due to poor decisions on your part. It happened and you can’t change the past. There’s nothing wrong with acknowledging why the foreclosure happened. This is how you grow from the experience and avoid repeating the past. However, the longer you sit around blaming yourself, the harder it’ll be to accept the situation for what it is and move on.
2. Don’t worry about the opinions of others
You might be able to hide the foreclosure from family and friends, and you might not. Bank-owned properties aren’t difficult to spot with those ugly legal notices taped to the inside window. So even if you don’t tell others about your situation, some people may eventually learn the truth on their own.
This doesn't suggest shouting your business from the rooftop and beating everyone to the punch. Understandably, you want to keep your private matters private, but you should also mentally prepare for the rumor mill. Some people will talk and make their own conclusions, but you can’t allow these people to get in your head, especially when some of the people making comments are only one or two paychecks away from foreclosure themselves.
A foreclosure doesn't make you a bad person and it doesn't necessarily mean you're irresponsible. Embarrassment and shame may cover your face today, but in a few months most people won't even remember what you went through.
3. Get negative feelings off your chest
Everyone has their own way of dealing with the emotional effects of a foreclosure. The worst thing you can do is keep negative emotions bottled up inside, or else you could start lashing out on those you care about. You need to find an outlet or a way to get these feelings off your chest. I know a couple of people who’ve dealt with foreclosures over the past few years and each had their own way of coping and recovering. After a job loss and foreclosure, one friend discovered that running and using a punching bag released his pent up frustrations, as well as confiding in others who went through similar situations. Another friend took a different approach and began working with a financial coach. She realized after the foreclosure that her entire financial picture needed revamping. Once she was in better control of her money, she was able to let go of the emotional baggage from the foreclosure.
4. What benefits do you enjoy now?
A foreclosure is devastating, but there's a silver lining in just about every bad situation. Yes, you lost your home, your equity and maybe a little bit of your pride. And returning to life as a renter can feel as if you’ve taken two steps backwards. But there’s an upside.
Since renters aren’t usually responsible for major home repairs or maintenance issues, there’s peace of mind in knowing you don’t have to shell out a ton of money when an appliance breaks or needs replacing. There’s more freedom to relocate as a renter, and the housing costs while renting may be slightly lower. This can improve cash flow and give you an opportunity to save and improve your financial outlook.
Losing a house is living every homeowner’s biggest fear or worst-case scenario. But now that you're out from under the mortgage, there may be a feeling of relief. A foreclosure will tarnish your credit report, yet you are given a fresh start. If you do everything you can to improve your credit score, the effects of the foreclosure will not be as severe in the next two, three or four years. Between improving your credit and saving your money, you'll be in a position to purchase again in the future. You can buy another house after three years and seven years with an FHA and conventional loan, respectively. Some lenders may approve you sooner if the foreclosure was due to extenuating circumstances.