Syrus said that debt is the slavery of the free - and today many people
find themselves so enslaved by money problems that it often seems there's no
way out. An unnecessary evil, debt is often the result of lenient policies
and aggressive marketing practices by credit card companies. Frequently, the
true nature of these companies isn't even apparent - nor the
magnitude of their power and vengeful nature made flesh - until it's too
late.
How do people get into debt? Real estate professional Jeff Brier says
that credit cards are high on the list of things that cause people fall into
debt in the first place. This includes the casual and unnecessary use of
credit cards for things like clothes, leasing cars, and even prostitutes.
And let's not forget using credit cards for on-line shopping and items that
could just as easily be paid for in cash (such as movies and groceries).
Another likely culprit, Brier suggests, is student loans. These loans do
not need to be paid off for years after school has ended and, he says,
"There is often a natural resentment and resistance to these payments that
gets many otherwise responsible people in trouble."
So what happens if you're already overburdened by debt - does this mean
that you won't be able to buy a home? Not necessarily.
Julie Waeshe of Tutt Real Estate says, "Many credit problems can be
cleared up with a letter to the credit bureau and the creditor. If that
doesn't do it, "sub-prime lenders" will take borrowers with Poor credit. Of
course, one has to pay the piper in the form of higher interest rates."
Jeff Brier agrees. "Actually," he says, "it's reasonably easy to get a
mortgage even with bad credit." And though many banks won't loan to a person
with bad credit,
others may.
Even with awful credit, says Jeff, you might be fortunate enough to find
a loan officer who works with (and helps) real estate agents and their
clients. Remember, these are business transactions we're discussing here,
and sometimes it behooves the key people involved to help each other out.
The loan officer is in the position to actually help a consumer clear up the
credit issues in order to get a mortgage. The lender, the real estate
professional, and the
buyer all wind up winning in the end.
"In all cases in my experience, and I have had a number of them," says
Brier, "people are so grateful the 'credit cloud' is gone from over them
that they keep their credit clean."
Interestingly, lacking a credit history - good or bad - can actually be
more of a problem than having bad credit.
"It's actually easier to get a mortgage with bad credit than it is to get
a credit card," says Brier. This is because lenders have no way of knowing
how you're going to fare as a customer. Without the history to prove you can
be reliable and that you'll make timely payments, you're seen as more of a
risk than the person who pays sporadically - but has proven that payments
are always forthcoming.
A final bit of advice comes from real estate agent Ed Downs. "If you're
thinking of buying a house," he says, "you certainly don't want to run out
~and obtain a car loan of any amount, because that will reduce your
borrowing power significantly. While cars are nice, you can't have your
friends over to dinner in your four-door sedan."
Be sure to get professional advice about credit and loans when buying a
home. Attempting to navigate the home-buying experience, which includes the
lending process, without the ability and acumen of a professional who has
been there often can be risky.
