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Buying a house is the long-cherished dream of many Americans. But most of them fail to realize this dream due to lack of finance. While some achieve this dream by applying for a home loan program, others restrict them to do so for bad credit. It is needless to say that one’s credit score plays a vital role during the home loan approval. A high score equals high creditworthiness, while a low score means low creditworthiness. And lenders are a little skeptical about approving the loan application with the lenders having a low credit score.
However, that does not mean buying a house with 580 credit score in Houston is impossible. Yes, you can get a home loan with a low credit score, but you have to make sure that you don’t make any of these mistakes.
- Not looking for government-backed home loan programs
If your credit score is lower than average and you are not looking for government-backed home loan programs, then you are making a grave mistake. While conventional loans ask for a good credit along with other requirements, government-backed loans have lenient requirements. You can get approval for an FHA loan with as low as 500 credit score and 3.5% down payment. If you are a military officer, veteran, or surviving spouse, you can apply for a VA loan. You can get 100 financing with this loan. Besides, there are USDA home loans for low to medium income group people. So, never restrict yourself from looking for a government-backed loan when your credit score is low.
- Not coming with a decent down payment
Have you not saved a good amount for the down? Then, you are lowering your chances of getting approval for a home loan with a 580 credit score. A down payment is one of the most important things along with the credit score that lenders check before approving. When you are saving for down despite knowing that your credit score is low, that means you are further worsening the situation. With a decent down, you can establish yourself as an honest buyer, who has the cash to pay back the loan. So, the lenders will be ready to approve your loan with a low credit score.
- Not shopping for lenders
Have you set your mind to pick the very first lender, you will get in touch with? If you are saying yes, then think twice. By choosing a local lender or one you first get in touch with, are you not losing your opportunity to crack a better deal? The requirements for getting approval for a mortgage loan vary from a lender to another one. When one asks for a high credit score, another lender may be ready to give you the approval with lower credit. Without asking for quotes from various lenders and comparing these, you could not understand this. So, shop for lenders to get the best deal for your home loan.
These are some common mistakes that can deprive you of getting approval for a home loan with a 580 credit score. So, steer clear of making these mistakes and ensure approval.