The most frequent question I hear from consumers who call me about an ad is, "Can you help me buy a home?" Often the answer is that I probably can't, at least not in the near term.
The fact that you wanted to buy a home was about all it took in 2004-2006. It was not uncommon for people who could not afford the rental deposit to instead buy a house with totally empty pockets. With home prices escalating at unrealistic rates, credit was extended to virtually any human who could sign the documents. If you couldn't make payments, there was little perceived risk to the lender because the home could be repossessed and re-sold with little or no loss.
That was then and this is now. Without adequate credit and reasonable income to debt ratios, simply wanting to buy a new home will not get the job done. You will need very good credit and/or a substantial down payment to buy a home today.
A consumer called me a few days ago asking for help buying a home. He lost his home to foreclosure not long ago, and he said it was because he lost his job. Now he is in an extended family shared rental, underemployed, and he is behind on all his bills. He has no money, but thinks he could sell his car and get a couple thousand dollars after loan payoff. He is considering filing for bankruptcy to help get his bills under control. Can I help him? Not this year, and maybe never.
If you're thinking about firing your landlord, start planning now, even if it means that you will be renting for a few more years. Today's home buyers are up to date with their bills, not already drowning in debt, and have a little cash in savings. For those more of a work in progress, now is the time to contact a home financing professional who is willing to coach you in getting on the path to home ownership.
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