Tuesday, December 1, 2009

Your Credit Concerns on a Home Purchase!

With concerns over debt, job losses, and if there is food on the table we are all worried in someway about or financial standing. While we wonder how much we saved and what our next paycheck is, what we should really be checking is our true worth....CREDIT!!

Most of our large purchases are done through some type of loan. This loan is given to us based upon our credit: confidence in a purchaser's ability and intention to pay, displayed by entrusting the buyer with goods or services without immediate payment.

In simpler terms...if you keep up on your payments, you have a better score and with that better score you can secure more moneys through various loan types.

We got into this financial mess because we all were more concerned about what we "had" and never focused on what we "truly had"!! Banks gave loans to people who could not pay, people took out loans on things they could not afford, bets were hedged on properties that were over priced and in the end we were over our heads in debt: an obligation or liability to pay or render something to someone else.

Now how does this affect a home purchase?

Well if not already known it affects it greatly. That credit we talked about earlier is crucial for receiving a Home Mortgage: a conveyance of an interest in property as security for the repayment of money borrowed. This issue is that the bets on over priced properties were these home mortgages. These mortgages were then given to people who couldn't afford them. The properties were then sold to these folks at a price much higher than the market could truly bear.

What Happened?

The homeowners then lost their jobs or stopped paying the mortgage payments because they truly couldn't afford them in the first place. These mortgaged homes were then took back by the banks who basically had an overpriced mortgage.....TO MUCH WAS BET ON A PROPERTY NOW WORTH 20% LESS THAN THE MORTGAGE HAD OUTSTANDING!

In today's Real Estate Market we are seeing large numbers of distressed properties. GREAT FOR BUYERS.....but remember your credit is at stake. Keep these valuable things in mind....

1. Ask yourself if you can truly afford these monthly payments.

2. Ask your Lender what the true costs will be (They are required by law to do so!!)

3. Look 2-5 years ahead and make sure you can still afford these monthly payments.

4. Don't forget other household expenses.

5. USE EQUITY WISELY!!!! - This is very important and another reason why so many homes have foreclosed. Don't take out an equity loan to go on a date or buy that new 4 wheeler. KEEP IT IN THE HOME!!

Stay focused and ask questions! The market will recover and we will be financially stable to make better decisions in 2010!

Justin Peck

Miller Real Estate

149 W. State Street

Hastings, MI 49058

Cell: 269-760-4965

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