With the sharp decrease in home prices, if you're like me then you're thinking of a way to benefit from the situation - either by buying your first home or if you already own maybe you want to purchase an investment property. But before you take on that mortgage, please consider the following 3 C's as outlined by CNBC's "On the Money" host, Carmen Wong Ulrich:
1) Collateral - You need to have an emergency stash of AT LEAST $10,000 in addition to a 10%-20% cash down payment.
2) Capability - You need to make sure that you have enough secure income coming in each month to pay your mortgage without struggle. In other words, if you're already planning to live off the McDonald's $1 menu in order to meet mortgage payments then you're in trouble.
3) Credit - Absolutely the most important C b/c without it you won't even get past "GO!" Especially given the mortgage crisis now. Many lenders are denying people with a credit score of 720 which is the nation's avg. Now you must come extra correct with a score of at least 780 or better or they won't even give you the time of day.
If you don't meet ALL 3 C's then you might need to defer your dream home for the time being until you can meet the prerequisites. For more from Carmen
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