You’d be surprised to know, bad credits are absolutely normal. Unfortunately, many borrowers do not take the next step as they worry about facing rejections. But do not crush your dream at a budding stage! Bad credit mortgages are widely available across Houston, and you can finally dream of achieving the much-cherished goal.
Whether a few missed bill payments or outstanding balance, house loans for bad credit are now a reality. More than 53% of citizens were turned down for bad credit last year. Credit ignorance is one of the common issues faced by 54% of millennials. But 57% of U.S. citizens also acknowledge having bad credit is far better than no credit at all. If you are unaware of the score, get the credit reports from the major bureaus. Once you learn that your credit is below 600, you would be thankful for the house loans for bad credit in Houston. So, go through the rest of the article and gather essential information.
Bad credit and house loans in Houston
It is a misconception that bad credit does not allow a borrower to apply for a mortgage. You can get a mortgage only when you are willing to pay expensive loan rates. Though it is true – low credit score increases the mortgage rates. However, the government-backed mortgages serve the borrowers with credit scores under 600.
Bad credit may not fulfill the dream of accessing a conventional loan but look at the bigger picture. Borrowers with crucial credit issues (such as bankruptcy or foreclosure) can finally purchase their own abodes. The FICO score requirement is flexible, and there are numerous options (such as FHA, VS, and USDA) to choose from.
But putting down a large payment is important
The best credit loans have the lowest down payment requirements. VA loan has no zero down payment but is exclusively for veterans. FHA loans are for all, and you can put down as low as 3.5%. Since the credit score is a result of unstable financial condition, you’d like to get low mortgage rates. For this reason, it is advisable to make a larger down payment.
Paying for the particular loan value is difficult, and you may consider choosing a side hustle. Low credit score and small down payment put a borrower at high risk before a lender. In case you can increase the score to 600, you can apply for down payment assistance.
Look at the risks before committing
Your bad credit remains the center of attention to the lenders, and there is no turning back. In case you didn’t know, lenders have breakpoints on credit. This leads to the ultimate interest rates. Remember, a fraction can bring a change worth hundreds and thousands of dollars. For instance, you can get a 4% interest rate for an FHA loan when your credit score is 600. Once your credit score dips down and hits 580-mark, your interest rate becomes 4.75%.
Now, you can understand that the road is not bumpy when your credit score is low. But don’t forget to seek help from a successful lender.