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  • Purchasing a home? What To Know if You Have Bad Credit

    Purchasing a home? What To Know if You Have Bad Credit

    Buying a home is no small feat, especially as the hot sellers’ market continues. It’s even harder to do with bad credit.

    Entering the house purchasing process with bad credit might make getting a loan seem practically impossible, but fortunately, there are bad credit home loans. So buying a house with poor credit is not as impossible as you initially believed it to be.
    We’ll look at ways to purchase a home and find cheap homeowners insurance with bad credit. Although higher credit ratings result in more favorable loan conditions, low credit can still buy a property. You can also often find senior discounts for home insurance.

    What is considered a bad credit score?
    Many lenders don’t need a minimum credit score to buy a home, which most consumers are unaware of.

    When it comes to your credit score, a traditional mortgage lender can establish its own standards. When your credit score is below 500, you might find it challenging to get a mortgage and may need to improve your credit rating.

    While government-backed loans like those from the Federal Housing Administration (FHA) provide some comfort to mortgage lenders, they still have credit score restrictions, even though they are often significantly lower.

    What is the best way to buy a house with bad credit?
    In terms of the actual figure, anything below a 670 score can be deemed “poor” or “bad” in the eyes of mortgage lenders. A fair score ranges from 580 to 669, whereas a low grade ranges from 300 to 579.

    Since various lenders have different standards, the lender you choose will also be a consideration.

    While a negative credit loan is possible, you can expect a larger monthly mortgage payment. Buying a mortgage with bad credit is similar to taking out a bad credit cash loan, like a payday loan — you have to expect to pay high interest.

    However, no two cases are alike, and lenders will consider a variety of factors in addition to your credit score, including:

    The amount of money the borrower has set aside for a down payment
    The borrower’s annual income
    The total amount of debt owed by the borrower
    Any money the borrower owes to a collection agency

    Below are some of the available loan alternatives for borrowers with poor credit and the average credit score criteria for each.
    FHA Loans
    An FHA loan is one that the government backs, and it requires a minimum credit score of 500. Because of the reduced qualifying standards, FHA Mortgage Loan Processing can be particularly appealing to first-time home buyers.

    There are also additional qualifying requirements for FHA loans. For example, an FHA loan can only buy the main house you intend to live in.

    Conventional Loans
    To qualify for a conventional loan, you don’t need a certain amount of income, credit score, or down payment. A credit score of 620 or higher, on the other hand, usually is necessary to qualify for a conventional mortgage loan.

    However, there are several exclusions. Even if your credit score is below 620, you may be able to qualify for a traditional loan if you have a high income compared to your loan amount or a more significant down payment than the minimum.

    VA Loans
    You may be eligible for a VA loan if you are a veteran or actively serving in the military. The Department of Veterans Affairs backs a VA loan, which allows you to buy a home with no money down. You may be required to pay a one-time funding charge by some lenders.

    To qualify for a VA loan, your house must fulfill specific criteria. While there is no minimum credit score to be eligible for the loan, you will typically require a 620 credit score or higher.

    USDA Loans
    A USDA loan is a government-backed loan backed by the United States Department of Agriculture. You may buy a home in a qualified rural region with no money down with a USDA loan.

    To qualify for a USDA loan, most lenders will demand a 640 credit score and other income restrictions related to USDA loans.

    Can I purchase a homeowners policy if I have a poor credit rating?
    Purchasing a house is a significant investment, so you have to buy homeowners insurance to protect that investment, even if it costs more than you expect.

    The good news is that even if you have a low credit score, you should be able to obtain homeowners insurance.

    Unfortunately, if you have terrible credit, you may have to pay nearly twice as much for homeowner’s insurance as someone with outstanding credit. Your total rates are also affected by the state in which you live.

    There are some actions you can take to get your insurance premium low, thankfully. To begin, look for a homeowner’s insurance coverage that meets your needs.

    The top home insurance companies for bad credit vary by location, and not all firms use the same formula to compute premiums.

    If you own a car, consider consolidating your home and auto insurance policies with the same company to save a lot of money.

    Imani Francies writes and researches for the insurance comparison site, ExpertInsuranceReviews.com. She is a homeowner who stays up-to-date on new purchasing trends to help other new homeowners save money on home insurance.

     

  • 7 Essential Reasons Why More and More People are Opting for VA Loans in Texas

    7 Essential Reasons Why More and More People are Opting for VA Loans in Texas

    There is a loan program for every mortgage borrower if you resort to the right real-estate lending service but for many, the VA loan stands out for a number of factors. Further supported by the U.S Department of Veteran Affairs, VA loans are formulated to assist the active-duty military personnel, veterans, and a few other people to turn their dream home projects into a reality at an affordable cost.

    Here, we have put forth a few vital reasons why the VA loans for low credit scores in Houston appear to be lucrative for so many people. Take a look.

    1. Low Down Payment

    The VA loans have the lucrative benefit of the very low amount of down payment. You just have to make 20% of the down payment but you will get a waiver of $453,100 and pay 20% of the amount more than this benchmark.

    1. Flexible Credit Score

    Compared to the conventional Jumbo loans, where one is required to have a credit score of more than 710, the VA Jumbo loans in Texas can be a convenient option. These require a credit score of just 620 or above to qualify for such a loan. Therefore, it will definitely open many news doors to achieving your dream home.

    1. Zero PMI

    Usually, in order to decrease their own risk on the Jumbo loans, the lenders make it compulsory to purchase the private mortgage insurance or PMI when you are making a down payment of less than 20%. This PMI can prove to be significantly expensive for loans worth hundreds or thousands of dollars. But now you can save thousands of dollars with VA Jumbo loans as these don’t require purchasing any PMI.

    1. Lower Rates of Interest

    When compared to the traditional loan programs, the interest rates for the VA Jumbo loans are significantly lower. In fact, these are even more cost-effective than the government aided programs like the FHA or USDA loans. So, refrain from paying excessive interests by opting for the VA loans.

    1. Government Guarantee

    VA Loans have such favorable terms and clauses because these come with a federal guarantee whereby a part of the loan will be repaid to the lender regardless of whether you can make the monthly installment or not. This kind of an assurance always motivates the lenders to provide the VA loans at the attractive terms as desired by the borrowers.

    1. Multiple Options

    There are various kinds of VA loans available in the market, right from fixed to adjustable rate ones which can be used for buying a newly built home, a house, duplex, manufactured home, or even a condo. You can also use it for refinancing your existing mortgage and repairing or home improvement projects etc. And since these mortgage rates are set by the U.S Banks, credit unions, savings & loan institutions, or the mortgage lenders, each of them will have their set rates and fees. So, this allows you to choose from a variety of options and compare them according to your budget and requirements.

    1. Low Closing Costs

    VA poses a limit to the closing costs charged by the lenders from the VA loan seekers. This is another amazing way in which VA loans can save your money. You can save your money and allocate it to the other expenses involving a new home including moving costs, home decor, repair projects etc.

    VA loans are extremely easy to qualify. Just like other conventional loan programs, a proper documentation, a considerable credit history, and adequate income are necessary for the monthly payments. But these guidelines are more flexible for the VA loans. So, without any further delay, you should immediately apply for a VA Jumbo loan now.

    Author Bio: Joan Gallardo, has 18+ years of experience as Senior Loan Officer, and here tells you why the VA Jumbo loans in Texas are a popular choice. Learn more about loan programs such as the VA loans for low credit scores in Houston by following his blogs.