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How to Approach the Mortgage Lenders for Low Credit Scores in Houston

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When the world is grappling with uncertainties, you need to make investments in the right place. Especially if you are planning to buy a home, you need to choose the right loan program. Along with the perfect mortgage, you need a professional lender. Now, every lender will not show interest in your profile. Lenders review a lot of factors before jumping into the mortgage process. For example, first-time homebuyers are likely to face the initial hiccups with bad credit scores.

So, how do you manage to get help from the best mortgage lenders for low credit scores in Houston? How do you prepare yourself? There are multiple things probably swimming in your mind but do not give in to the pressure yet. The borrowers with low- or moderate-income have several government-backed loans to mull over, at present. If your credit score is lower than 620, do not worry. You can apply to an FHA loan with a 580 FICO score and a VA loan with a 550 FICO score. However, you need to remember a few things and take the necessary steps. Let’s have a look at the essential tips below.

Mortgage Lenders Review Your Credit Score 

The lenders get your credit reports from three credit bureaus which are, namely, TransUnion, Equifax, and Experian. Considering every agency’s scoring system, the lenders pull your credit scores and reports. Then they choose the score in the middle to proceed with an average number. If you do not have a credit history at all, ask an expert about how to get started. Or, if you are not employed, you can search for ways to improve the score while looking for a job.

Understand What Defines Low Credit 

Many borrowers have nurtured a misconception that you need a gold-plated credit card to purchase a house. As mentioned earlier, the lenders evaluate your financial situation before processing the loan application. When you have been working steadily for the past few years, you might have a regular monthly payment history. Then the number of missed bill payments is low. But what is an excellent credit or fair credit? What is exactly low credit? If your credit score is more than 800, you have an excellent credit score. If your credit is between 580 and 669, you have fair credit. When your credit score is lower than 580, you have a poor credit score. So, you are a bigger risk, and the loans may cost more than you imagined. Even though you have a low credit score, you can still apply for VA, USDA, and FHA loans. Once you pass the eligibility requirements, there are several benefits like zero down payment and no private mortgage insurance.

Every loan process requires a little or extensive paperwork. In addition to it, you would like to appear as prepared before the mortgage lenders. So, get your documents including W-2s and tax returns sorted before contacting a lender. Also, hire a professional lender who is approved by the authority and has years of experience. The entire process is not challenging, so good luck!

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.