Good credit is quintessential for a mortgage application. However, circumstances leave you with drawbacks and obstacles in life. Knowingly or unknowingly, your credit scores have tanked. What are the only options left? Do not feel down when your credit score cannot assure a conventional loan. Multiple options wait for you, just like many mortgage lenders are willing to help. The bad credit scores do not decide the fate of your homeownership. But for getting what you wanted, you need to remember a few things.
The low credit score mortgage lenders in Houston, TX are equipped to help people with a not-so-stellar financial history. The range of bad credit starts when the FICO scores are below 620. If you have more than 620, you have fair scores. Now, the best way to get the lowest interest rate is when the score is above 700.
Nevertheless, you need to present your best self before the lenders. How do you do it? Let’s take a look at the things you must remember.
Let Your Lenders Know
It is difficult when your scores are low. But you can eliminate the struggle by informing your lender. Explain what has caused the low credit scores to the lender. Often, the lenders relax the guidelines after reviewing the financial history. If you had a past of unemployment or financial emergency, credit scores might be low. You can also take time to resolve the challenges and unlock a better rate. Of course, when you are back on the track, you can make a convincing case out of it.
Shop around for the Best Option
Many borrowers ignore the power of shopping around. If you receive the offer without understanding the benefits, it is never a good idea. Credit unions, mortgage brokers, banks, and financial institutions are commonly found lenders. When you do not explore your options, you never know what is waiting for you. The more you shop around, the better your chances to find a mortgage with low scores. Start scouting for government-backed loans like FHA and VA programs. The FHA loan requires only a 3.5% down payment, and the VA loan has zero down payment for veterans.
Look for Down Payment Assistance
Making a 20% down payment can reduce the risk factor. When you are going through a difficult time regarding the down payment, the assistance program proves to be beneficial. From forgivable loans to grants, there are various options available. You can also apply for low-interest and no-interest loans. Different requirements for DPA are applied so you should go through before applying. It is quite important to consider the monthly expenses prior to taking out another mortgage.
If you can remember these tips, the road should be the very opposite of bumpy. Ask around or get recommendations from your friends and family. Of course, you can take your time to improve your scores. It is going to be time-consuming so you should do it when you have ample time. Start your research and get started!