Have you made some financial mistakes? Have the mistakes drastically affected your credit score? Then, it will really be a reason of concern for you, especially if you are planning to opt for a home loan program to buy a house. Well, there is still hope for you.
Wondering how to get home loans for low credit scores in Houston, TX? There are several mortgage lenders who approve the loan application of the homebuyer even when his or her credit score is low. And all that you have to do is to use some tricks for this. Here are the ones
Look for a co-signer
When your credit score is low, you can find someone to co-sign your loan. It will help you to avoid a bad credit mortgage altogether. However, when doing so, keep in mind that you will be putting a family member or friend on the hook for your debt. In case you default, both you, as well as your co-signer, will suffer the consequences. So, be careful when you add a co-signer to your loan application.
Arrange a good down payment
One thing that boosts your chance of getting a home loan with low credit is a big, fat down payment. In case you have access to some cash, it can go a long way toward helping you secure a mortgage loan. After all, the lenders need some assurance that they will get their money back. The more equity there is in the home you buy, the easier it would be for them to start their process. Moreover, a higher down payment will mean that you won’t have to pay private mortgage insurance that is required for the homeowners who put down less than 20 percent of the cost of the home. If you don’t have it, you can accept down payment money from family or friends. However, it must be a gift, not a loan, and you will need a “down payment gift letter” to prove it.
Don’t agree to a prepayment penalty
Often lenders try to convince borrowers to go with a home loan with a prepayment penalty. It is essentially a clause in your mortgage contract, which allows the lender to collect extra money if you pay off the mortgage early or make extra payments above a certain limit to help reduce your debt. A prepayment penalty can be expensive. So, you should never agree with this.
Improve your credit
If your credit score is low, one of the oblivious ways to boost your chances of getting a home loan is to perk up that score. It takes a long time, but even a little improvement in your credit score can make a real difference. Have a look at your credit report and check whether there are any inaccuracies. Disputing imprecise information can give your score a good boost almost instantly. If you have more time, you can use several strategies including, paying down your overall debt, making loan payments on time every month, etc. All these will give a good boost to your credit score.
So, what to wait for? Use these tricks and increase your chances of getting a home loan 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.