One of the most essential steps to buying a home is to obtain the finance successfully that is frequently done by getting a home loan. The mortgage process is easy for the ones who have a fair idea about this. Along with this, it is also important to be aware of potential myths that are often associated with the credit scores, down payments or lenders.
To help you, here, we have put together a few myths that you should be aware of before applying for 500 credit score home loans in Houston.
- A 20% down payment is needed to get a home loan
A common mortgage myth that exists is that only potential borrowers who come with a 20% or more credit score can get a home loan. There are some mortgage products, which reward borrowers who have 20% to use towards a down payment. But it does not mean that this is necessary to get a home loan. You can even get approval with a low down payment. A tip to follow is to first determine which type of mortgage will be the right fit for you based on your circumstances. If you can afford a hefty down payment, then you can go for the mortgage loans that will meet your needs. But if you can provide very little down payments, then opt for the programs that need a very little down payment. Choose the perfect loan based on your needs.
- You should have perfect credit to get a loan
Credit is very important when it comes to applying for a home loan program. But one of the most common myths is that only borrowers with perfect credit scores can get a mortgage. If a potential borrower with a very low credit score applies for a loan, it would be too difficult for him or her to get the approval. But you can get a home loan with a 500 credit score. The higher credit score always offers you some benefits. So, homebuyers take steps to improve their credit scores. But you can get a loan with a 500 credit as well.
- Income can only determines how much one can borrow
Your monthly and yearly income is truly vital, but it is not the only factor that can determine whether you can get approval for a certain type of loan or not. One of the most asked questions about mortgages relates to how much you can spend on a home. There are other factors as well, including credit scores and down payment percentages. Your income is only one requirement among various ones when it comes to determining how much a home you can borrow.
- All mortgage lenders are the same
One of the ridiculous myths is that all lenders are the same. It is absolutely incorrect. There are diverse things that differentiate them. Every mortgage lender offers different mortgage products, offers different interest rates, different fees, and has different guidelines. So, it is suggested when buying a home, you should ask for quotes from different mortgage lenders, compare them, and then, go for the one that will be the most viable choice for you.
So, you don’t have to worry about having a low credit score. Look for the home loans that accept low credits and apply for this early.
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.