Most home buyers and real estate investors learnt the hard way in the previous real estate market crash, that it is very important to cut one’s coat according their size. Just because the bank or the mortgage lender says that one has an ability to pay a loan, does not necessarily mean that one really has the ability to safely secure that loan. The metric system involved in providing this decision is not perfect, and it is the buyer’s responsibility to do their homework and ensure that they are really able to handle a particular amount of loan. It is true that real estate in Cambridge is generally valued way above the national average, but it is also true that if one seizes these properties responsibly and without hurting their budget, they can reap very good fruits from their investment.
Historically, mortgage lenders will claim that if one’s mortgage value is less than a third of their regular monthly income, then they have a good chance of securing the mortgage. They also factor in other financial commitments that the potential buyer may have. Apart from regular utilities, these could include credit cards, legal fees, other mortgages, car payments, medical bills and other related expenses. It is important to note that one can qualify for a higher loan value than what they are applying for, and great care should be taken before increasing the loan amount.
Most home buyers who lost their homes during the mortgage meltdown, will agree that had they not gone for higher amounts and more riskier loans, they would still be owning their homes today. Others found themselves out of well-paying decent traditional jobs that were originally considered to be secure. Worse still, others who were into entrepreneurship, suddenly lost their credit lines and so a huge shift on their customer base. While exploring Cambridge real estate, it is important to consider that one’s income might dwindle over the length of the mortgage, and necessary insurance should be exploited.