My husband and I bought our first house in 2007, shortly after becoming parents. The Las Vegas home was perfect for us and our newborn, with three bedrooms, two bathrooms, and a big kitchen. It was in a beautiful, gated neighborhood with a park at the end of our street. We were happy there and happier still with the 6-percent adjustable rate on our mortgage.
Less than two years later, we were forced to leave our perfect home behind because our payments had grown by more than 50 percent.
It was difficult to give up on the house and our dreams. However, we moved on, and we now live in a secure rental while we recover our credit so we can buy another house when the economy is better.
Obviously, the foreclosure had disadvantages: losing our home, trashing our credit, having to move, etc. What I didn't expect were the benefits that would come from foreclosure.
No. 1: Financial security
I can't begin to explain how nice it is to pay my bills every month and know that they aren't going to change. I never had that certainty with our house because of our adjustable-rate mortgage. Now I don't have to worry about getting behind on other bills just to pay the mortgage. Our new home offers us the financial security we need right now. Not only is our rental payment the same every month, but we don't have to worry about taxes, HOA fees, or major repair costs to the house. Those alone are saving us a few thousand dollars every year.
No. 2: Reduced repair costs
Unexpected home repair bills were always a strain on our budget. Now that we're renters, if something major breaks -- like the air conditioner -- we are not responsible for the repair costs. We had to replace our air conditioner in the house we owned, and it cost us nearly $3,000. It's a big relief now to hand over those high-dollar repairs to our landlord, and it leaves more money in our savings.
No. 3: Personal finance awareness
My husband and I were in our early 20s when we bought our home. Now we're older and wiser -- and, truthfully, we know how to handle money better. We're more aware of interest rates and our credit. Having a deeper knowledge of personal finance has definitely helped us this time around. We know better than to get in over our heads, whether it is with a mortgage, credit card, or car loan. We've committed ourselves to borrow money smartly and to do so as little as possible in the future.
My husband and I decided to purchase a second car to help us build up our credit scores. We determined exactly what we could pay and haggled with the dealership until our monthly payments were where we needed them to be. In the end, I had negotiated the car down $3,500. I would have never done such a thing before my foreclosure. Negotiating has also worked out for me with obtaining lower interest rates and credit increases on my credit cards.
No. 4: Fresh start
As hard as it was, we couldn't help but feel relieved when the foreclosure was over. We were able to have a fresh start, move away from a neighborhood where everyone knew we were losing our house, and stop living in fear of our bills. The fresh start has livened up my little family; we're happier, and we don't feel guilty if we want to take a little vacation getaway that would have killed us when we were facing foreclosure.
No. 5: Stronger relationship
When we were losing our home, there were a lot of big decisions to make. The only way we got through it so well was by discussing every single one of them until we were both satisfied with our decision. We both realized that when going through something this stressful, it is important to know that someone is there to support you 100 percent.