Looking out for a Home Loan with Bad Credit? Things You Never Knew

Many future buyers barely have an idea their credit score has gone down. You may go through a similar situation when you are unaware of your credit history. Purchasing a home is not the easiest thing in the world. Additionally, choosing a loan program is equally challenging! If you have never missed a single payment and are responsible for your income, you are likely to be in the clear. But the past bankruptcy or foreclosure might put you in the spectrum of bad credit. Of course, there might be numerous reasons behind poor credit – you should be careful about it.

The relationship between a mortgage program and credit score is intertwined. The interest rate goes down when you have a brilliant score. Hence, you can imagine what happens when you have bad credit. In the last half of 2020, bad credit is everyone’s concern. The year has given major financial setbacks to almost everyone. There is no reason you would not like to get competitive loan rates against your bad credit.

So, the article further deals with the necessary information that you must remember. The tips will help you pick out the best house loans for bad credit in Houston. Don’t worry; there is always hope for a cheaper loan regardless of your credit. Let’s go through the suggestions below.

What if you had bankruptcy or foreclosure?

There is no denying that foreclosure or bankruptcy leaves a havoc impact on the credit score. But remember, poor credit never lasts forever. Bankruptcy can stain your credit history for 7 to 10 years. Shocked? Don’t be because FHA and VA loans have a particular waiting period for borrowers with a history of bankruptcy. Who knows you can get back on track after 2 years? Even with poor credit, subprime mortgages might make 100% financed mortgages.

Bad and no credit are not the same

No credit refers to your non-existent history of managing credit accounts. If you do not take an action against your no credit, it will become more difficult for lenders to loan you money. When your credit is between 300 and 850, it is a sign of carrying credit. If your credit is between 580 and 619, you can apply for an FHA loan with a 3.5% down payment. If the credit score is between 500 and 579, you can still apply for an FHA loan with a 10% down payment. The lender would like to see whether outstanding debt obligations are cleared. When the credit score is between 620 and 699, you have average credit. With this credit range, you are eligible for conventional loans.

Since the COVID-19 pandemic, many borrowers’ have noticed a huge dip in their credit scores. In this case, many lenders have also made their guidelines more lenient. Prepare yourself by going through the credit score eligibility requirements. This helps you understand whether you have a shot with the mortgage program or not. So, keep your eyes open and get ready for the biggest purchase of your life!