You have waited for a long time. Now, it is time to buy a home. But you don’t have the required finance and wondering what to do? Well, you can apply for a home loan program. But to get a home loan approval, you need to fulfill certain requirements of a lender and one of the primary ones of them is a good credit score that shows your creditworthiness.
Have some credit mistakes affected your score? Wondering what to do? Well, getting a home loan approval with a low credit like 500 is often considered difficult. But it is not impossible. Eager to know what to do? Here, we have listed down a few things that you should consider to get 500 credit score home loans in Houston –
Down payment
Your down payment can help you get a home loan approval even with a low credit score. A down payment in a home loan refers to the amount that you need to pay to the mortgage lender when you buy the home on credit. Conventional loans ask for a higher down payment of nearly 20%, while government-backed loans like FHA, need at least 3.5% down to get approval. However, you can’t get approval for a 3.5% down payment and 500 credit score. Besides, some lenders can ask for higher down payments. So, you should start saving as much as possible for the down payment. You can also request gift money from your family members. Moreover, opt for down payment assistance programs to manage your down payment amount. Take all the possible steps to come with a hefty down payment.
Interest rate
It is another pillar of your home loan program. Mortgage or interest rate means the rate of interest that you have to pay over the life of the loan. Homebuyers generally want to lower the amount as much as possible to save money. But with a lower credit score, you could hardly expect to get the best interest rate (though it varies from a lender to another one). Rather when you will be ready to offer a high-interest rate, it would be easy for you to get the approval and fulfill your dream of homeownership.
Co-signer
To get approval for a bad credit home loan, you can look for assistance from a co-signer – one of your family members or friends. You first ask him or her, whether he or she is ready for this or not. You should never force one for this. It is not small favor and the co-signer will be responsible if you default. Also, if payments are late or not made, the co-signer’s credit will be affected.
Besides, shop for lenders and look for low credit home loans to fulfill your dream of homeownership, So, what to wait for? Get started today!