Excellent credit, good credit, fair credit, bad credit… you must have been hearing these terms a lot, right? Amid all the questions that have been keeping you wide awake at night, there is only one daunting question. Can you get a mortgage with bad credit in Houston? It definitely seems to be a fair query when everyone is going through a financial crisis. Even though the pandemic has been leaving a mark on people’s lives, the mortgage rates are significantly low. So, the question irks your mind once again – can you apply for a low with credit scores under 620?
Yes, there is a set of house loans for bad credit in Houston, and they prove to be feasible for many. Purchasing a house is an important financial decision to make, but problems start surfacing when the credit score is below 600. More than 30% consumers have bad credit and are inclined to choose bad credit mortgages. FHA mortgages allow borrowers with 500 credit scores also. So, how do you kick off the process? What should you keep in mind for a hassle-free mortgage application process? Let’s go through the next section of this article.
Looking out for a bad-credit house loan
There is a range of options available for the bad credit; you need to make the right choice. But you should be ready to pay more. Low credit scores lead to high mortgage rates. The government-backed loans manage to offer competitive prices, but the small down payments incur mortgage insurance premium. Veterans and active-duty service members can apply for VA loans, but the particular mortgage program is not available for everyone. FHA loans are for all, especially those who have 500 or 580 credit scores. The Federal Housing Administration does not lend you the loan amount but insures a percentage for the lenders. The flexible guidelines improve your chances to get approved for a home loan. Talk to an FHA-approved lender to gather a comprehensive knowledge of the eligibility requirements.
Look for a co-signer
If you get a friend or family member to co-sign on a home loan, the burden is less. Of course, the co-signer needs to be a potential borrower. The person who is co-signing might put you into jeopardy with his/her bad credit. Bear in mind, the co-signer is also responsible when you stop making mortgage payments. It turns out to be a risky option when things do not pan out as planned. However, many financial advisors do not recommend this alternative. The problem surfaces when you are roping in for a large amount. Nevertheless, FHA lenders allow co-borrowers, and the concept is quite similar to co-signers. Additionally, the co-signers do not have an ownership interest for the property.
High mortgage can be a matter of concern as it costs thousands of dollars every month. A little bit of effort can get you what you want. Follow the credit repair guidelines and work on improving your FICO scores. Most importantly, find a helpful lender.