Loan Crisis? Not so bad if you can handle it.

A year ago, I was able to qualify any of my real estate clients with just about any house they wanted to get into. As long as they were comfortable with the monthly payments (debt), I was comfortable. It made business a lot easier, and a lot more enjoyable. In today's world of real estate, even the best borrower will run into hiccups during their financing stage.

I had a buyer who made tons of money, who was doing 20% down, and who had 750+ credit score. Perfect candidate right? Shockingly, she was forced to do close to 30% down with her second mortgage interest rate not so prime. What does this mean? It means that even if you think you are going to be able to buy a house with no problems because you have great credit, lots of money to secure the loan with, and more than a solid income track, you are in for a surprise. That surprise will likely come to you two days before closing if you are lucky.

But let's not be completely pessimistic. You can still buy a house in the end if you are prepared to handle the hurdles that the lenders will throw your way. I can't stress the importance of keeping up to date with what your credit score is. Having a good credit score will not only make your financial situation stronger, but will also save you tons of money. It is true that people with bad credit will either be charged a lot more for a loan (because banks think they are risky borrowers), or lenders will simply refuse to lend to you. Concurrently with having a good credit score, leaving some cash in your pocket will probably prove to be wise. In my example above, if my client had not had some extra money in her accounts, she would have lost her purchase. Always have some reserves just in case two days before closing, the bank asks you for additional money.