I had to make one of those God-awful real estate calls yesterday. I had to tell a family to stop packing because the deal on their home was unraveling. It seems that the buyer of their buyer's home no longer qualifies for a mortgage and since his contract on our house was contingent on the sale of his home, the deal is dieing. No fun!
And then I got another awful calls this morning that things are not looking good for a purchase for a buyer client. They have mortgage commitment and are awaiting clear-to-close on a non-income verification loan. All the rules have suddenly changed and now they need 20% down instead of 10. That's an extra $16,000. I don't know about you, but I don't have that kind of cash sitting around waiting for a bank to suddenly change the rules.
And in the past week or so, I've had two different buyers ask for my advice on private mortgages because the banks won't currently consider them under the current strict guidelines. Private lenders are looking for interest rates upward of 14%.
The very good news is that mortgage rates are improving (slightly, but still improving) for those with outstanding credit and money to put down.
My message to you? Do what it takes to have good credit. First and foremost, pay your bills and pay them on time. Learn the difference between money problems and spending problems. Develop a budget and spend less money than you make. Get out of debt. It's not easy and it takes a concerted effort and discipline by the entire family but a good credit score is increasingly becoming your most important asset.