Even with todays tightened lending practices anybody with a few dollars in the bank, a steady job and decent credit can be approved for a home loan. Loans of 100% are still commonplace, but are they for you?
Before you take a home loan for 100% of the properties value ask yourself a few important questions.
Am I upwardly mobile, will I be making more money in a year, two?
Is my relationship status, whatever it may be, stable?
Am I going to stay in Madison for several years?
Is it safe to say I will not experience any major life changes for a few years? (kids, divorce, etc.)
If you answered yes to all of those questions, then go ahead and buy a house, maybe even one mortgaged to 100%. If you answered No to any of those questions, ask yourself what kind of risk you are willing to take. Assume the market will be flat for a few years and that the very small amount of principal you pay down on a young mortgage (maybe 3-5% of your monthly payment) is all the equity you have when it comes time to sell. Will you have enough equity to walk away clean if some worst case scenario knocks at your door.
Once you have made the mistake there are two ways out. 1. You get lucky and sell your house for more than it is worth in a slow, saturated market. 2. You sell your house at a loss, the bank approves a short sale and your credit score gets a big black eye. Both 1 and 2 allow you to avoid the F word, foreclosures.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment