So, you have finally made your mind to buy a home this year. If it is not now, it will be never. But don’t you have the required finance? Well, various home loan programs are there to finance your loan. Even it will be easier for you to get approval if you have a great credit score. Are you saying your credit score is 500? Then, it will be difficult for you to get approval, but it is not impossible.
There are several things that can help you to get a 500 credit score home loans in Houston. When your credit score is low, focusing on other things related to home loan programs would be wise for you. Do you know what the things are? Even if not, you don’t need to worry. Here, we have put them together for you –
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Down payment
It is one of the fundamental things that can ensure a low credit score home loan approval. It refers to the amount that you need to pay to the mortgage lender when you buy the home on credit. While conventional loans ask for a 20% down payment, loans like FHA, need at least 3.5% down to get approval. However, you should keep this in mind that the decent the down amount you will come with the better it would be for you, especially when your credit score is as low as 500. So, start saving as much as possible for the down payment. You can also ask for gift money from your family or relatives, or start looking for down payment assistance programs for your down payment amount. Do everything that you can for coming with a hefty down payment.
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Interest rate
It is another pillar of your home loan program. Mortgage or interest rate means the rate of interest that you have to pay over the life of the loan. Homebuyers generally want to lower the amount as much as possible to save money. But when your credit score is already low, you could hardly expect to get a low interest rate (though it varies from a lender to another one). Rather when you will be ready to offer a high interest rate, it would be easy for you to get the approval and fulfill your dream of homeownership.
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Co-signer
When you have bad credit you can look for assistance from a co-signer – one of your family members or friends. You first ask them, whether they are ready for this or not, you can’t force one for this. It is not small favor, as the co-signer is responsible for the repayment of the entire debt, not just a part if you default. Also, if payments are late or not made, the co-signer’s credit will be damaged.
You can also shop for lenders to compare their quotes for home loan programs and look for low credit score home loans like FHA or VA. Thoughtful steps can help you to get the approval for a lender and realize your dream of homeownership.
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.
