What Should You Do to Get a Loan with Low Credit from Mortgage Lenders in Houston?
Bad credit is one of the main obstacles that can prevent one from getting a home loan. If you have made some credit mistakes and so, there is a drastic fall in your credit score, then you may keep wondering what to do? Is it not possible for you to get a home loan? Do you need to stop dreaming of your own home? Well, though it is difficult to get a home loan with a low credit score, it is not completely impossible, as there are lenders who offer bad credit home loans.
However, before you opt for one of the low credit score mortgage lenders in Houston, Tx, you need to involve yourself in some work. Or, you can say that you have to take some steps so that you can establish yourself as a potential borrower in spite of having a low credit score and thus, increase the possibility of getting the approval early. Would you like to know what you need to do? Here, we have listed down those for you.
- Review your credit score and repair it
Credit scores continually fluctuate. So, before you apply for a home loan program, check your credit score. Checking it will not affect your credit as it is considered as a soft inquiry or a soft pull; therefore, it is not strong enough to damage what you already have. If your credit score is low, you should take steps to improve it as soon as you start researching a home purchase. Even if you are able to raise your credit score to 660 from 650 or so, you may able to save a few percentage points of your mortgage interest rate. Even a slight increase in the credit score can contribute to enhance your ability to get the loan, as well as help you to save a lot over the life of the loan.
- Lower your credit utilization
The less you owe in comparison to what you could borrow, the higher the score would be. This metric is familiar as a total credit utilization rate. According to experts keeping your credit utilization across all your credit cards below 30 percent will work to your advantage. One trick that you can pay for this is to pay your balances off before the closing date of your credit card statement. If it is not possible for you to pay the entire balance off before the statement closing date, at least try to keep the amount you charge to less than 30 percent of the amount of credit available. Keeping your balance below 10 percent of your total available credit will perk up your credit score even better.
- Check eligibility for FHA or VA loans
Once you have done everything to bolster your credit score, the next thing that you can do is to check whether you are eligible for FHA or VA loan programs. Backed by Federal Housing Administration, an FHA loan is designed for low-to-moderate-income borrowers. And backed by the Department of Veteran Affairs, VA loans are designed for veterans. These loans have less-stringent credit requirements. If you go outside of conventional loans, such as VA or FHA loans, your down payment obligations shrink or disappear altogether.
So, if you find that you have a low credit score, then take steps to repair your credit score, pay the bills on time, check eligibility for other loan programs, and do everything that can help you to get a home loan from a lender easily.
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.