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Gaining homeownership is one of the cherished dreams of many people. However, bad or poor credit is the dark cloud hovering over your sweet dream. When you are going to purchase a home, the dreaded credit score becomes the center of attention. It is a remarkable criterion during the mortgage application process. It sounds eccentric but only three digits can fix your fate of owning a house. Therefore, the credit score has massive importance and works in mysterious ways. Do not let the score dampen your spirit! There are still plenty of ways to find house loans modified for bad credit.
So, the first thing you should know that the credit score is not only for the house loan. However, it depicts the entire picture. The term signals the FICO score which ranges between 300 and 850. When your credit score drops lower than 620, you are instantly in the red zone. Due to several factors like missed payments, the length of credit history, and new credit, your credit score might be hampered. So, do you want to follow the essential tips for finding the house loans for bad credit in Houston?;Read the rest of the article now.
FHA Loan Comes with Mortgage Insurance
FHA loan is one of the popular mortgages designed for borrowers with a poor credit score. The conventional loans ask for at least a 620 credit score before sanctioning the mortgage. However, FHA loan offers a loan when the score is lower than 620. If you have 500 or 580, you can heave the sigh of relief. Now, if you are going to make a down payment lower than 10% of the loan value, you are left with FHA mortgage insurance for the rest of your life. Or, when the down payment is higher than 10%, you need to pay an FHA mortgage for only 11 years.
VA Loan does not Require Down Payment
The flexibility of the VA loan gives the mortgage an edge in the traditional loan market. Unlike other loans in the market, VA loans do not charge mortgage insurance. For the conventional loan, the borrowers should put down 20%. When it is for the FHA loan, the borrowers might have to put down 3.5%. In this scenario, the VA loan program does not ask the borrowers to put down anything. The veterans sacrifice their lives daily. Therefore, the former military service members deserve such a benefit. When the service members are running short on cash, the mortgage does not request any down payment. Without a doubt, this kind of advantage is loved by every military buyer.
Apart from keeping these two pieces of information in mind, you can purchase a home after declaring bankruptcy. Of course, there must be a waiting period for the borrowers suffering from bankruptcy. It is also possible to refinance the loan with poor credit. If you ask the private lender, you can find the right option suitable for your poor credit profile. So, get help now!