When you are buying a mortgage for the first time, it’s no shame to admit that you’re clueless. It is a natural feeling when you see the loan options, credit qualifications, and eligibility requirements. Homeownership is not naturally a cakewalk, but with the right preparation, it can be.
First-time homebuyer programs with low credit scores in Houston, TX are doing rounds. FHA, USDA, and VA loans are the popular faces of the government-backed programs. But many future homebuyers struggle to find the starting point. So, here are a few tips that will help you to get through the mortgage application process without hassle.
- Start the Loan Process Early
If you want to see how much house you can afford, you should start as early as possible. When you have time, you can rebuild the credit. The lender can also patiently walk you through the process. Make sure you get pre-approved and understand the loan option available for you.
- Get to Know Your Credit
When you are a first-time borrower, it’s a common thing not to be familiar with your credit scores. As a result, you do not know much about the credit report either. Do a lot of research on the credit report and scores.
Now, you can download a free copy of the credit report from TransUnion, Equifax, and Experian every year. If you check the report on a monthly basis, you will know why your credit score is down. In many cases, borrowers are victims of identity thieves without their knowledge. The credit report shows the entries for which you are not responsible. Correcting the credit report may be time-consuming sometimes. For this reason, starting out early is a good idea.
- Learn about Mortgage Types
Fixed-rate and adjustable-rate mortgages are two types you will find in the market. As the name suggests, fixed-rate mortgages start out with an interest rate that remains the same. Adjustable-rate mortgages have a lower interest rate which increases with time. The interest might remain the same for 3, 5, 7, and 10 years. On the completion of the initial period, you will have to pay a hefty amount. Fixed-term loans are great for buyers satisfied with a fixed monthly mortgage payment.
- Discuss Your Situation with a Lender
For acquainting yourself with the mortgage application process, you should sit down with a lender – even if it is virtually. With years of experience in the industry, their personalized advice might save you thousands of dollars. Also, there is a chance to benefit more from their guidance. If you are worried about your incapacity to make a large down payment, lenders can offer down payment assistance programs.
In essence, borrowers with low credit scores should keep government-backed loans in mind. The mortgages have different eligibility requirements along with credit qualifications. FHA loans are the best bet when you are not a veteran or looking for a house in rural areas. Before deciding, take the help of a lender in Houston.