4 Newbie Mistakes to Avoid before Looking for Mortgage Lenders with Low Credit Scores
Buying a home is one of the most important purchases of your life. With so many things are involved in the entire process, that homebuyers, especially the first-timers, are confused to make a decision. And in such a situation, they are more prone to make mistakes.
To ensure that you take a wise decision and avoid mistakes when working with mortgage lenders for low credit scores in Houston, here we have put together a few mistakes and why you should avoid them.
- · Failing to check your credit
There are diverse things that rank high in terms of importance, however, in reality, having a good credit score helps you a lot to get a home loan. A credit score is a three-digit number that evaluates the creditworthiness of a consumer. The higher the credit score, the better it will be for you. To know your credit score, you should check it time-to-time. You can also check whether there is any wrong information or issues that need to be corrected. Review your credit score to see whether you need to improve your credit before applying for a home loan program. If your credit needs work, it would be better to take some time to bring it in shape so that you are able to qualify for the lowest interest rate that will ultimately help you to save a lot over the life of the loan.
- · Not comparing the rates
When it comes to applying for a mortgage loan, not all the lenders are created equally. Each lender is free to decide the mortgage rate, and so, it varies from a lender to another one. While some of the time, the difference is slight, other times, it is a big one. So, when you shop around for a home loan, it is better to ask for interest rates from lenders, compare them properly and then decide who to choose. By choosing a lender, who asks for the lowest interest rate, you can save a lot over the life of the loan.
Not saving enough for a down payment
Perhaps your mortgage lender said that you can qualify for a $200,000 home, therefore, you begin looking at houses right around that amount. However, you should not forget to consider the down payment that you need to have at closing. At a minimum, 3.5% would be needed for an FHA loan program, while other loan programs need a little more. If you don’t have that amount of money, start saving and build up money for the down payment before you start looking for a home.
Not preparing for additional fees
Along with the cash that you will need for a down payment, there are other fees that you will be responsible for to close on your new house. Some of these fees might be negotiable, but many are fixed. Save the cash for the appraisal, title, up-front real estate taxes, insurance, lender fees and many more. Several days before closing, you will receive a closing disclosure that breaks down the terms of your loan. All final costs expected at closing and the details of who pays, as well as who receives money at closing.
If you can avoid the above-mentioned mistakes when buying a home, the mortgage process will be a smooth one for you. So, keep these in mind and go ahead with your home buying process.
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.