In this ear, a few blemishes on the credit report are inevitable. The mistakes made at a tender age might haunt you; hence, the never-ending series of loan rejections! As it is not that hard to suffer from a low credit score, you should be more careful. After all, your lack of attention can put a pause on your life-long dream. The difficulty in finding a mortgage increases with the dearth of optimal credit score. However, you can get away with a suboptimal credit score. Contradicting to the conventional loan, the non-traditional loan is easier to qualify. You can try to build a credit score from the beginning after an unfortunate financial occurrence. Nevertheless, there are other easier ways available.
One of the hassle-free options among the house loans for bad credit in Houston is an FHA-insured loan. This government-backed mortgage comes with low down payment and credit score requirements. There is, of course, a VA loan that does not have any minimum credit score guidelines. Such lenient mortgage requirements ensure a bright future to every borrower wishing to live the American dream. Even the home loans for poor credit scores are for low-risk lenders but every lender does not approve of it. At this time, there are certain things to bear in mind for finding the ideal house loan. Read these essential steps before finding the ideal home loan.
Try to Save for Closing Costs and Down Payment
An easy avenue to improve credit score is to find out a loan with a healthy down payment percentage. Many lenders have a habit of dealing with a 20% down payment on the purchase amount. If you are willing to go with something lower than this percentage, you may be stuck with private mortgage insurance. However, the low down payment amounts are simply saviors in many cases. If you are going for an FHA loan, you can avail 10% and 3.5% down payment. Again, paying down debt is a wiser investment than buying a home when you are dealing with high interest on credit card debts. So, VA loan and USDA loan do not have the requirement of down payment.
Look out for a Flexible Lender
When you are dealing with poor credit, every lender might not show interest in you. Along with the government-insured mortgages, you must look out for flexible credit criteria. The minimum credit score requirement for FHA is 500 but the lenders are free to set their own credit score requirements. If the lender sets minimum credit criteria as 580, the borrower can put down at least 3.5%. When the credit score requirement for FHA is set as 500, there will be a 10% down payment. Either way, the professional lender can find the best option using their resources. Of course, you should have a particular property in mind before applying for the loan. Purchasing the home is not going to be very simple but the lender can work on it. When there is a professional involved, the pre-approval gets easier.
It is not difficult to find a house loan for imperfect credit score; you only need to be aware of a few specific things. So, get in touch with a lender to shape your dream home into a reality.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.