Here’s How You can Get Ready for a Low Credit Score Mortgage Lender in Houston
What a year it has been! A majority of the potential borrowers suffered from sudden termination, bad credit, and what-not. Their financial history went down, but many people are coming right back on track. Every little step that they have taken is finally paying off. In 2019, 88% of borrowers closed the deal and entered their first home. However, the number is predicted to be low in 2020. Of course, the low rates have proved to be an advantage for many. Now, when it comes to the mortgage application, credit score needs to be mentioned.
After the economic crisis in 2008, the housing market has undergone a significant change. The global pandemic seems to hit the financial market pretty hard as well. Naturally, the effect is seen in the borrowers’ credit scores. Bad credit is acceptable to mortgage lenders nowadays. But not every lender is cool with low credit scores! Only those who offer government-backed mortgages can help you.
But how do you approach these low credit score mortgage lenders in Houston, TX? If you are completely clueless about the mortgage application and anxious about the credit scores, a few things can come in handy. So, let’s go through these tips before making a hasty decision.
How is your credit score decided?
Credit score refers to your financial habits. Do you miss payments every month? Or, are you good at paying bills? The three-digit number signifies whether you have a tendency to pay debts on time. Meanwhile, remember that the credit score and credit report are two different things. The credit score is a result of your credit report. The credit score can obstruct the loan application approval, affect the interest rates, and influence the employment application. It is always good to keep an eye on the report, and you will get a basic idea of the credit. Lenders find out your financial situation through the credit scores acquired from TransUnion, Equifax, and Experian.
What are the options left?
Available for every low-credit-score borrower, an FHA loan is a fruitful choice. The Federal Housing Administration insures the program for the lenders. So, your goal is to find lenders who are willing to offer the loan program with 580 and 500 credit scores. If your credit score crosses the 579-mark, you can put down only 3.5% of the loan. For FHA loans, you can also receive the down payment as a gift from eligible sources.
Another popular choice, which is available for veterans, is the VA loan. Akin to FHA loans, the lenient guidelines attract borrowers with bad credit. If you shop around, you can find VA-approved lenders setting the lowest credit to 550. Additionally, no down payment and no mortgage insurance premium are also present.
So, find out the lenders who can help you with low credit scores instead of rejecting. Moreover, you should remember to follow the guidelines and prepare for the requirements. Without knowing the guidelines, you cannot go far. The requirements change according to the lenders,