The mortgage process can be intimidating, especially if your credit score is low and if you don’t have prior experience of opting for any kind of loan program. As long as you are familiar with the basics of mortgages before you begin the process, and choose a good mortgage lender to guide you all through the process from the offer to closing, getting a home loan will not be daunting for you.
So, if you are in search of mortgage lenders for low credit scores in Houston, here are the things that you need to know:
- Know your credit score and try to make damage control
You may not want to check your credit score before you start shopping for a mortgage lender. But checking your score beforehand, give you an idea of what sorts of terms mortgage lenders may offer you. Many card issues offer a free FICO score as a bonus, however, if you want to get a full credit report, you may need to pay for it. Some of the loan programs need certain minimum credit scores. Just to name one example, a conventional mortgage program needs a minimum FICO credit score of 620, while an FHA loan program can be obtained with a score as low as 580. If you check your credit score and find that it is 600 or below 600, you can focus on lenders, who offer FHA loan programs. Moreover, you take effective steps to boost your credit score and enhance your possibility to get approval for a desired home loan program.
- Be familiar with the difference between interest rate & APR
One of the most important things that you should know before you start comparing mortgage lenders is the difference between interest rates and APR. An interest rate refers to the price that you pay for borrowing money. And it is expressed as a principal amount you are borrowing. On the other hand, APR or Annual Percentage Rate is the total cost of borrowing money. Along with the interest, or finance charge, APR also includes some more fees that you will pay to borrow the money, such as mortgage orientation fee charged by the lender. The point is that APRs and interest rates are often a little different. And an APR is the number that you should consider when comparing the offers of the lenders. You may be surprised to see how different the APR can be between two loans with the same interest rate.
- Discern how to shop around
Another important thing that you can do when looking for a low credit score mortgage lender is to shop around. Talk to different lenders and have a look at their online reviews to the lender’s reliability, customer service, and other qualities. You also ask them about what is the least mortgage rate that they offer and the credit score that they want for approving the loan application. Comparison helps you to know about different lenders and who will be the ideal choice for you.
As you are now familiar with the basic things related to credit score and mortgage lender, start your search for mortgage lenders, compare them, and opt for the one who will approve your loan application easily.
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.