Purchasing a house is a dream for many people, but it can be the most expensive purchase of your life. Even if you try to save enough money for the mortgage, it will turn out to be challenging. For alleviating your pain, the FHA loans save dreams. An FHA loan opens doors for the buyers who cannot afford to purchase a house. Due to their unstable financial condition, their credit score is not above 620. FHA-approved lenders offer loans which are backed by the government.
Before you find the best FHA lenders in Houston, you should remember a few things. Getting a mortgage can be a stressful event, but a lender guides a borrower in every step. Of course, every FHA lender is not the same. In case you didn’t know, the Federal Housing Administration does not fix the credit score requirement. For instance, some of the private lenders set the credit requirement at 580, and some of them demand 600. As you already do not have 620, you cannot apply for a standard mortgage. At this time, an FHA loan is your best bet. If your credit score is below 600, you can apply for the loan with 580. Finding the best FHA lender brings along many favors, as you can. But you should prepare for what is waiting. Let’s have a look at the tips below.
Improve Your Credit Score
Most of the FHA lenders have more than 600 credit scores, but many borrowers belong to the bad credit category. FHA loans have low credit score requirements, but low credit score puts you at risk. The loan rate becomes higher when you have a low credit score. If you have a credit score below 580, you will have to pay for a 10% down payment. When you are already in a tumultuous financial condition, a down payment higher than 3.5% of the loan value does not help. It is a smart decision to increase the credit score. To start the process, you should confirm that the credit report is free of errors. Also, try to reduce your debts by paying off high-interest debts. If there is no credit report error, you should work on the debt-to-income ratio. Paying down the credit cards and outstanding balance can improve your credit score. Therefore, the lender can offer a low-interest rate and 3.5% down payment.
Shop around for the Best One
You may want to buy the loan because the lender has more lenient guidelines than others. However, you will end up having high-interest rates and paying for hidden charges unknowingly. For averting such risks, you should shop around before finalizing. FHA-approved lenders fix the loan rates according to the present market condition. They check the profit targets and business costs before deciding on the loan rates. So, one lender might be more or less expensive than the others. You will never get the best FHA loan rate until you look around.
As FHA loans have become a necessity, looking for the best FHA lender is also essential. Read the fine print before making a commitment always.
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.