If you tried to secure a bad credit mortgage a few years back, the chances of securing an approval were pretty bad. All that appears to have transformed for the better and today, 500 credit score mortgage lenders Houston are more than happy to approve home loans for borrowers with all kinds of credit scores. Even the mortgage companies and large banks are jumping into the fray, translating to enhanced competition, higher approvals and reduced rates for everyone. Bad credit mortgage lenders realize that this is a huge segment of the home loan avenue and it is also significantly profitable for them.
Both conventional mortgage companies and 500 credit score mortgage lenders Houston determine your worthiness for credit by evaluating your credit score, also known as a FICO score. These scores are reported by three significant chief credit reporting agencies, Experian, Trans Union, and Equifax. The higher your FICO score is, the higher is the probability that you are to get a great rate on loan. However, the reverse is true as well. Anything below the range of 620 is considered bad credit by almost all lenders and most mortgage lenders won’t even feel like offering you a home loan if your score is well under 500.
While you can not get approval for a bad credit mortgage like a piece of cake, the bad news is that some of these lenders will try to get the advantage of your poor credit score circumstances and will hit you with exceptionally high-interest rates. This, where appears great for the lender, earning more bucks from the interest, however, is pretty bad for the borrower involved. Chances are, if you possess a bad credit situation, you might not be in any condition to pay for extraordinary interest rates on your mortgage. 500 credit score mortgage lenders Houston will also require those with bad credit to make at least a down payment of 20 of their total home purchase price which actually turns out to be great news since it translates to a smaller loan and smaller monthly payments.