Getting a mortgage loan for buying your first home is no more be a reason of worry, thanks to FHA government home loan programs. Unlike conventional loans, FHA loans require a lower minimum down payment and credit score. And so, most of the home buyers prefer to opt for this loan program than the rest options.
If you have bad credit and want to get a home loan, then choosing the FHA loan program will be the right decision for you. As there are several FHA-approved mortgage lender, you can easily choose one and apply for an FHA home loan. However, if it is going to be your first experience of applying for a home loan, there is a possibility to get swept up in the whirlwind of home shopping and make mistakes. To help you, here, we have put together a few things to avoid when go for FHA government home loans bad credit in Texas.
Taking suggestions only from one lender
One of the biggest mistakes that first-time homebuyers made is to get a mortgage from the first lender that they talk to. A good mortgage lender will always look at the situation of the buyer, diagnose any potential roadblocks, and then suggests the home-buying options. Without comparing, you can’t understand whether the first lender you have talked you is offering you the best option or the worst one. The more you compare, the better you will understand. So, shop around at least three different lenders and then decide who to choose.
Buying more house than you can afford
Falling in love with a beautiful house is not a mistake. But if it stretches its budget too much, then it is never a good idea. Getting a home loan for buying a house that exceeds your budget, especially when your credit score is low, is difficult for you. Even if you get the home loan, it will put you at a higher risk of losing your home if you fall on tough financial situation. Moreover, you will have less wriggle room in your monthly budget for other expenses or bills. It would be better for you to focus on what monthly payment you can make rather than fixating on the maximum loan amount you can qualify for. Just because you can qualify for a particular loan amount, that does not mean you can afford the monthly payments that come with it. And you should not buy more home than you can afford.
Draining your savings
Spending most or all of their savings on the down payment and closing costs is another grave mistake that first-time homebuyers make. Some people scrape all their money together to make the 20 percent down payment, especially when they have a low credit score. But with this, they are left with no savings at all. You should aim to have three to six months of living expenses in an emergency fund. Paying mortgage insurance isn’t ideal, however, depleting your emergency or retirement savings to make a large down payment is riskier.
So, you should avoid these mistakes when applying for an FHA loan with bad credit. And to know more, ask a reputable lender about this.
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.