Buying After The Sub-Prime Crunch

Buying After The Sub-Prime Crunch

The days of getting a quick easy mortgage are clearly over.  A year ago, mortgage money was flowing.  Predatory lenders signed people up for mortgages without paperwork, gave out loans that covered 100% of the home's value and weighed them down with outrageous payments that exceeded their income.  The subsequent fallout from those loan practices has been tremendous, leaving lenders scrambling to clean up a mess of foreclosures and defaults.

They've also tightened the purse strings - especially when it comes to the subprime market.  Lenders are demanding documentation, downpayments and turning back to more traditional methods of qualifying loans.  Those with a long history of paying bills on time won't be affected, but first time buyers or buyers with spotty credit histories need to get their paperwork in order.

Here are 5 ways to make buying after the sub-prime crunch a reality:

1. Find a banker or mortgage broker you can trust.
    
2. Improve your credit rating: even if you're a year or more away from making a purchase, it's never too early to start.
    
3. Clean up your credit report: take care of any problems or errors on your report.
    
4. Educate yourself: learn the terms and take time to build your team of experts.
    
5. Work with a real estate professional: a good real estate professional will always save you time and money in a real estate transaction versus going it alone.

Buying a home will probably be the single biggest financial investment you'll ever make but it doesn't have to be the biggest risk you ever take.  With the right real estate agent, financing, information, and financial management, you will be on the path to a future that includes home ownership.