Buying a home brings responsibilities, decisions, sleepless nights, and more. Of course, it is exciting but it can be daunting at times. When you have been caught up in the dilemma of whether to go for it or wait, things are not as easy as it seems. The major financial consequences are hard to overlook at the time of buying a dream abode. Don’t you worry; the financial situation is not going to be as scary as they say. Once you get approved of a house loan, things will definitely start to look up.
Now, to get approved for the house loan, you need to have a high credit score. If the FICO score is less than 760 or 680, there are ample opportunities open. In any case, beware of the common mistakes committed by first-time homebuyers struggling with the credit score. As they are completely new to this scenario, the mistakes are also bound to take place. So, you should know how to make things right for the first time home buyer programs with low credit scores in Houston, TX. Read the article and prepare accordingly.
Managing Credit Score Carelessly
The financial institutions focus on the credit score before the approval. This is a way to check things beforehand and limit the risk of default. In case, you are opening a new credit card account, this can affect negatively the ultimate loan approval. If you still have a decent credit score, leave it as it is. Do not spend money extravagantly or opt for new credit cards, the present status quo will be enough. When you pay down the current balances to 30% of present credit limit, you will be in safe hands. Additionally, first-time homebuyers should focus on paying bills per month.
Not Gathering Info on Nontraditional Programs
It is well-known that the new homebuyers are going to face issues with credit scores. For this very reason, government programs are available in the market. To start this discussion, there is an FHA loan allowing 3.5% down payment when the credit score is as low as 500. USDA loan is designated for certain areas and the borrowers can put 0% down. Apart from these common loan programs, there is VA loan guaranteed by the US Department of Veterans Affairs. People who have served in the military can claim the loan to buy their dream house. Just like USDA loan, it is possible to get 100% financing even by putting 0% down.
Making Super Low Down Payment
At present, you do not need to make a 20% down payment and you can still operate with 3.5% or 0% down payment. This is occasionally a good idea but people lament over it. There are many people who have considered waiting until they are ready to make a bigger down payment. The bigger down payment ensures smaller mortgage; hence, the monthly house payments are affordable.
To make a lower down payment or not to make? If there are various questions buzzing your mind, you can always resort to a lender.
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.