On Shaky Ground - Page 3 of 3

On Shaky Ground

means you will more likely be rejected. Even if you’re approved, you will probably pay a higher than normal interest rate, says Freeman.

Delay the home purchase. They should not attempt to buy a house until Rob’s credit issues are resolved and his credit score has improved. The difference in what they’ll pay with a subprime mortgage versus a conventional mortgage is staggering. A $150,000 mortgage at 10%would cost them about $1,300 a month. That same mortgage at 6%will cost them$900 per month. Also, at 6%, $1,300 a month would allow them to borrow about $217,000. That means a bigger house, a nicer neighborhood, or both.

This story originally appeared in the November 2008 issue of Black Enterprise magazine.