I prided myself on being a person of integrity — doing what I am supposed to do. A person who never lets people down. However, I was thrown into an identity crisis when we were forced into foreclosure on our family’s first home. It was a time where, with God’s help, I conquered feelings of doubt and became stronger in the process. Through the years of struggling to overcome this financial and personal adversity, I have learned ten lessons I hope will prevent others from falling into the same traps.
If it seems to Good to Be True, it Probably Is
We tend to forget this age-old adage when an amazing opportunity comes our way. In 2005 we bought our condo in California when everyone could get a mortgage. We were two recently graduated college students, with only one credit card to our name (no history of credit), little to no savings, small paychecks, and very little work history. Yet, we could get a loan for over $400K!
The risky loan market offered very few advertised warnings. Instead, everyone was buying homes, vacation homes, rental homes, boats, jet skis, cars, motorcycles, you name it, and everyone felt like they had this “wealth.” So many people we knew were becoming mortgage brokers because the money was fast, easy and lucrative. There didn’t seem to be any risks, and we were naive thinking things were only going to go up.
Faith Over Fear
We kept hearing things along the lines of, “We made $100k in equity in barely over a year on our house! Get in while you still can!” My husband and I were renting a one bedroom apartment and driving our little 1994 Toyota Tercel amidst Mercedes, BMWs, and even Vipers and Ferraris.
People close to our age were purchasing large, beautiful, Tuscan style homes, and living the high life. We felt incredibly poor and like we were quickly being left behind. We turned to those who seemed to have the answers — the ones living the high life. They told us to BUY! You can’t get rich renting. You need to be a homeowner. Buy what you can afford now, and sell in two years to move the equity to something bigger and better.
Everyone meant well. However, it wasn’t good advice. We learned you should buy something you would be comfortable living in for 5+ years just in case. However, the lesson learned is when advice lends to fear of missing out it is not a reliable source.
Instead, we should have turned to God in prayer.
Faith brings peace and guidance pushing away fear, and the madness often associated with it. We turned to those with the loudest, and most bombarding voice, rather than the One who knew what was best for us.
I am not implying advice from others is not valuable, but a good measuring stick might be to judge the feeling it produces. Panick and fear? Or does the advice breed logic and peace, excitement, and encouragement?
We have found feelings of worry, anxiety, and fear of being left behind are not coming from the source of truth but man and his often false sense of direction.
What Goes Up, Must Come Down
Yes, the law of gravity applies to financial markets as well as our pride. I have learned health and safety come from moderation. An extreme diet is never maintainable in the long run. Feeling like invincible and on top of the world isn’t long term either. In the last 18 years, three different financial markets have crashed.
In 2000 it was the dot-com bubble bursting. I was graduating from high school in the heart of Silicon Valley. People I knew, who had hit it “rich”, were now bankrupt and scrambling for a menial paycheck.
Then in 2008 the real estate bubble burst. For condo owners like ourselves, things turned bad before 2008. In real estate, condos are the last to get good and the first to go bad in real estate. The equity everyone’s homes had “earned” was now in the negative and all those amazing mortgage rates were rising and becoming impossible to pay.
Next was the oil and gas industry that seemed untouchable. Due to a surplus, companies had to lay off workers and cut budgets to stay afloat. Many friends and associates are still reeling from this downturn, unable to find a job since being laid off years ago.
I have learned no one is untouchable. If things get too good to be true, the market corrects to a more healthy and sustainable level.
You Are Not Alone
When going through any trial, it is easy to feel alone on the sinking ship. Everyone seems to be safely enjoying their island of peace and prosperity, while the waves are capsizing your little boat of doom. The appearance is inaccurate.
Even though we are not all going through the same trial, we can often relate because our experiences are similar. As humans, we are often good at hiding or pain. We have mastered the public happy face. However, when I have opened up to others sharing my struggles, I have found we are far from alone.
People Are Often Answers to Prayers
Earthly angels are all around us, coming into our lives when we need them most. When going through our foreclosure, we had so many people bless our lives.
After being laid off, my husband was unable to find employment the hard-hit Sacramento area. With bills needing to be paid, out of state family members reached out with an entry level job with potential to pay off in the end. Meanwhile, they offered us a room in their home until we could make ends meet.
After several months, another angel came into our lives with the perfect rental opportunity for our then family of four. Our landlord became a friend and a foster grandpa to our little boys. A new friend quickly entered my life before I could feel alone, immediately helping me become acquainted with a new state and area.
When my husband’s job grew and then relocated, we moved to yet another state and another home in an expensive area. Once again, a kind person offered us a simple home to rent within our budget.
Both landlords didn’t care about our horrible credit or history of foreclosure. They gave us a chance when many wouldn’t, blessing our lives immensely. Rather than charging us higher rent, their benevolence allowed us to save money, repair our credit, and raise our family in peace and safety. We were surrounded by amazing neighbors and friends who blessed our lives in so many ways.
Patience Brings Miracles
Patience is a hard virtue of having. First, doubt creeps in, and hope slips away when things don’t seem to be working out. I can’t even begin to name all of the miracles in our foreclosure saga. I’m sure there are many I don’t even recognize. The irony of being blessed with places to live when our foreclosure was what had left us homeless did not escape our notice.
Living with our family was a huge blessing; however, we didn’t want to impose. We started looking for a place to rent after a month. Nathan was working two jobs. I was taking care of our two little boys and cleaning his office building on the weekends. We hoped to be able to find a place of our own but quickly discovered we could only afford a place in scary areas of town. Feelings of being poor and trapped quickly set in. The ideal was just out of our reach, and hope felt fragile.
After several months of looking, we found the perfect rental on Craigslist. We immediately called hoping to see it. As we drove into the neighborhood, we felt as if we had entered an oasis. Upon meeting the landlord, it became apparent we were each an answer to each other’s prayers.
We rented out his 1800 square foot, walkout basement with a view of Mount Rainer and Puyallup Valley for $1000 a — utilities, phone, and cable included. This simplification alleviated the stress about extraneous bills, banks not approving short sale offers, and creditors coming after us. We were able to afford health insurance and groceries. What a blessing.
Two years later, my husband’s job relocated us to Colorado.
Having visited my grandma when I was 13, I had always wanted to live in Colorado. I was sad to leave friends and the beautiful state of Washington, but excited to move where I always hoped we would live.
Once again we discovered affordable housing to be difficult to find. It was 2011, and our condo had been foreclosed on. We were on the road to recovery, but still unable to get a loan. We knew we couldn’t buy a home, and so we searched rental ads.
My grandma suggested we call leaders of our church and see if they knew of any rentals in their area. We figured maybe someone was in our situation, needing to move for whatever reason, but being underwater and couldn’t sell.
After many phone calls going straight to voicemails or being told “nothing existed in our price range,” we found someone who had our answer. A friend of a friend knew of a family who had just moved out the week before. We were connected with the landlord of the now vacant home. After working out a rental agreement long distance, we flew out to see the home and meet him. Everything felt right and just fell into place.
Five Years Later
After living in Colorado for over five years, our landlord called and said he was thinking of taking advantage of his equity and selling. We had been looking for a home to purchase for two years. Our credit was now clean, but nothing had felt right. We had been saving so much because of our low rent, but prices had continued to rise in the South Denver area. We didn’t want to buy again when things were HOT. However, when our landlord called, we knew it was time to get serious in our search.
After looking at a handful of homes, we decided to call people we knew who lived in our “dream neighborhood.” Two of the three suggested the same house, one I had driven by a week prior but was WAY out of our price range. Without realizing they had given me the owner’s number of this expensive home, I gave the lady a call. Within minutes I realized she was talking about the home we couldn’t afford, and cordially told her “thanks but no thanks–we can’t afford your home.”
A few hours after we had hung up, she called back and said she had talked with her husband, and they wanted our family to move into their home. They were willing to drop the price $70,000 from what they were originally asking. It still allowed them to keep some equity, and move into their “dream home” in Kansas City, MO, where her husband had been relocated. We were a tremendous blessing to each other, and both families saw miracles as the situation worked itself out smoothly and peacefully. Being patient brought us so many miracles, too many to mention.
Necessity Breeds Invention
When the going gets tough, the tough get going.”
Our going had gotten tough, and so we had to figure out what we were made of. My love and respect for my husband grew when he applied to menial jobs just to make a paycheck to support our family. It grew, even more, when he worked multiple jobs to make ends meet. Because I had our boys to take care of, I would work weekend mornings.
We were living tightly and worked every odd job we could find, and when Christmas came just a few months later, we knew we had to be creative. I decided to draw a picture of our boys for my husband’s gift. He put the framed drawing on his desk at work, and a client asked about it. She asked me to draw a picture of her new baby daughter.
This was the first time I had ever gotten paid to do something I loved. Out of necessity came invention. I then went on to draw a religious drawing I ended up selling multiple prints of allowing for some much-needed side money. These opportunities were just the beginning.
Your Living Situation Does Not Define You
After going through this housing/credit trial for nearly a decade, I realized I believed in something ridiculous. I had been associating a person’s value based on how they lived or what they lived in — including myself.
I felt like less of a person because we rented an apartment. And then we lived in a condo. Then we lived with our family. And then we rented the basement of a home. And then we rented a basic home.
I felt embarrassed having people over because my living arrangements were less than ideal: too small, not fancy enough, etc. At the same time, I perceived people who had bigger, nicer homes to have more value and worth. Consciously, I never thought these things, but when the realization hit me. I couldn’t believe how shallow I had been.
I have lived in nice and not so nice homes. Did my worth or value change between those living situations? No.
I have met all kinds of people, those that live in multi-million dollar mansions, and those that live in section 8 rental apartments. There are good and bad people. Some live in mansions, and some live in the slums.
Where you live, or what you live in, does not determine your value or worth. Who you are and what you stand for and value determines your worth. We are all children of God, and we all have divine worth regardless of everything else.
Don’t become house poor
In 2005 we were eligible for a mortgage amount far above what we could afford to pay. Our first condo was far less than we were approved for; however, the $325/mo HOA dues sank us and our ability to sell in the future.
We have kept a record of our incomes and expenses since we were married in 2003. Looking back at 2006, a year after we bought our condo, I couldn’t believe what I saw.
We lived a simple life. My husband was the sole breadwinner while I stayed at home with our first child. Monthly he was bringing home $3200/month. Our first and second mortgages plus our HOA dues came to $1549 – 48% of our income. Our only car had a payment of $194, and our groceries averaged $200. Add in utilities, gas, and random expenses — we were barely making ends meet. We were “house poor.”
A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. This debt-to-income ratio is called the “housing ratio” or “front-end ratio.” Bankrate.com
With insurance, we were around 50% DTI.
After looking for homes for several years, we were tempted to buy a home out of our price range —again. How easy it is to forget the pains of being “house poor” when you see all the bells and whistles in a home you “need” to have. We felt frustrated walking away from great homes because we couldn’t afford. We feel grateful to have purchased a home in the safe debt to income ratio.
“Adversity is like manure — it stinks, but things grow from it.”
I have no idea where this funny quote originated from, but a good friend of mine said this once when I was a teenager, and it has stuck with me.
Adversity is like manure — it stinks, but things grow from it.”
Going through foreclosure has so many “stinky” aspects, but so do many other aspects of life. In our 15 years of marriage, we have faced seemingly insurmountable trials but time has allowed healing.
Choosing to look at the bright side shows the value of lessons learned and character traits gained. This trial has allowed us to meet some of the best people, learn what we are made of, and see the blessings of patience, hope, and prayer. I have learned where my worth comes from and have discovered how creating brings me fulfillment and happiness.
I am grateful we foreclosed on our first home. This trial was perfectly tailored for what we needed to learn and has helped us gain wisdom and strength. Before we bought our current home; we were petrified of making the same “mistakes.” However, with the gained knowledge of how the housing market works, and relying more on God and His direction this time around, we know we made a better choice. Even if the market tanks again, we know we are right where we are supposed to be and will be able to make it through the next trial if we stay close to our Savior and Father in Heaven.
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A version of this post was originally published on Mimiberry Creations