Back To Basics

It appears that El Capitan of the Federal Reserve Ben Bernanke has done a fine enough job to maintain his post as the Chairman for another 4 years.  From my perspective, this was a fine choice by our President.  Switching monetary horses mid-stream would be fairly catastrophic for the already fragile investor sentiment towards our shaky economy.

So, bravo Mr. Bernanke.  Why on Earth this man would want a job where he gets screamed at for days on end twice a year and has the weight of the financial world on his shoulders I will never know.  But, he seems pleased with it, so I’m happy for him.

Beyond that bit of news, I wanted to take a week to discuss with you the basics of mortgage lending.  I know, I know, you people hunger, nay, you THIRST for my rampant sarcasm and my piercing com­mentary on the most relevant issues in our economic lives.

But one of the most golden opportunities in real estate to date is about to expire, and I would be doing you all a disservice if I didn’t provide at least one frying-pan-upside-the-skull type of message just laying out there what it takes to join the proud ranks of American homeowners.

Listen: lending has tightened from it’s hay-day of “If you have a pulse, you’re approved!” but it isn’t ridiculously hard either.  Here’s what we’re after:
1) Pay your bills on time for 12 months.
2) Have a score of 620 or better.
3) Be somewhat consistent in your employment.
4) Don’t spend more than half of what you make on anything that’ll show up on your credit report
5) Bring a 3.5% down payment of the price of your dream home.  Or your starter home.  Or your “I just simultaneously found out that I got a promotion and that my mother-in-law is moving in and I need more space” home.  Either way.  3.5% is the moral of that story.
Be patient and find a seller desperate enough to take care of your closing costs.

Are there exceptions to these rules?  Yeah.  Is there any other stuff?  Yeah.  But those are the biggies.  It’s not 20% down and a 700+ credit score and the soul of your 1st-born child like some people think.  If you make sense to the bank as someone who will pay your mortgage, they will line up to fund you.

With Uncle Sam paying through the nose to keep rates low and an $8000.00 check waiting for you in 2010’s tax season (only 89 shopping days left, kids), it might be a dandy idea to at least give home­ownership a shot.

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