Have you been hearing a lot about the low credit scores in Houston? Since people are grappling with excellent credit scores amid the pandemic, the bad credit mortgages are a boon. FHA loans, VA loans, and USDA loans are preferred choices among many first-time homebuyers. But are you taking two steps back every time you hear something weird?
Myths and misconceptions are a common part of every industry, and mortgages are no exception. If you let the myths shape your mind, you might lose the chance to find the perfect home loan. Now, would you not like to come out of the bubbles of myths?
Here are the misconceptions regarding home loans for low credit scores in Houston, TX are debunked. Let’s take a look below.
Myth #1: You need to make a large down payment
FHA and VA loans are already popular for offering low and zero down payments. The former offers a 3.5% down payment, and the latter does not demand any down payment. Similar to the VA loans, USDA programs do not require down payment and pay attention to keeping out-of-pocket expenses down. Typically, almost every mortgage requires a 20% down payment. A few conventional loans can go as low as 5%. Nevertheless, FHA borrowers can receive the down payment as a gift from friends and family members. Also, state-funded or local government grants are available for assisting the FHA, USDA, and VA borrowers with the down payments.
Myth #2: VA loans are astronomically expensive
VA mortgages are well-known for their amazing benefits, and are regarded as the best bet among military service members and veterans. No down payment, zero private mortgage insurance, and competitive loan rates are a few of the reasons to choose VA mortgages. The past records show that 90% of VA purchases include no down payment. Also, VA lenders allow borrowers with 550 credit scores and a high DTI ratio. But the borrowers need to pay one thing – the VA funding fee. Unless you are a veteran with a service-related disability, you need to pay the funding fee.
Myth #3: USDA loans are only for farms
The US Department of Agriculture might have insured the mortgage, but it does not stand for buying farms. USDA mortgages are designed to turn homeownership affordable in rural areas. If you are purchasing a property in an underdeveloped location, USDA loans can offer you the necessary financial assistance. Do not dwell in a misconception; the mortgage is perfectly available for outskirts or suburbs, too. It is best to discuss the property requirements with USDA-approved lenders.
Once you are able to look past the bad credit home loans in Houston, things will seem clearer than ever. But do not hold onto your bad credit for long, work on it. When you have excellent credit scores, lenders are likely to show more interest. Most importantly, the interest rate will dramatically go down. Talk to the loan experts before choosing the perfect option. Of course, don’t forget to discuss the eligibility requirements.
