People wish to buy a home with the help of mortgage loans, but there are many things to consider. The aspiring homebuyers must take into account their financial position and know what type of home loan would suit them according to their needs and financial ability. The credit scores are a vital factor in nearly all types of loans available in homebuyer assistance programs.
The credit scores are a basic tool used by lenders to know about the creditworthiness and financial ability of the homebuyer to repay the loan on time or not. The credit scores are devised by FICO (Fair Isaac Corporation) and begin from 300 and end at 850. The scores are classified as
- Excellent score: 800 to 850
- Very Good score: 740 to 799
- Good score: 670 to 739
- Poor score: 580 to 669
- Bad score: 300 to 579
The bad credit mortgage lenders Houston TX mostly consist of government approved lenders who offer government backed loans, including the famous Federal Housing Administration (FHA) loans and Veteran Affairs (VA) loans. The first time homebuyers mostly have bad credit and look for government assisted loans because they fail to obtain conventional loans offered by banks and private lenders. The banks consider it a big risk as a person with bad credit would probably default on the loan, and the bank would have to suffer a loss. The homebuyers wishing to get government home loans must first show high income, low debt to income ratio, and payment of all the debt they owe.
The bad credit mortgage lenders Houston TX offer the FHA loans which are known to be the best home loans for first time homebuyers having bad credit. The FHA loans are popular because of their simple loan terms and allowing people with even poor and bad credit to buy a home in the city of Houston. The homebuyers with bad credit score 579-500 would only have to make 10% down payment to obtain the FHA loans.
The bad credit mortgage lenders Houston TX also offer the VA loans to war veterans, their families, and active service military personnel to buy a Texas home. The VA department does not even have any minimum credit score requirement and guarantees the VA loans, which allow bad credit mortgage lenders to provide loans to the potential veterans. The veterans with bad credit not only get to buy a home but have numerous advantages such as no down payment, no mortgage insurance, low closing costs, and low interest rates.