3 Reasons Why Getting a Home Loan is Challenging & What You Can Do about It

Buying your dream house can be a solid investment but it can also turn into a nightmare if you cannot pay for it entirely. That is why you need to make sure that you have sufficient funds to purchase the house you want. But it can prove to be a huge obstacle for many especially if one doesn't come from an affluent background. It is not possible to buy an entire house with just savings. A great solution is definitely a mortgage program. There are several kinds of home loan programs which can be availed to invest in your house. But it is crucial to pick the right mortgage plan. Homeownership is a source of wealth and an important asset. You must not forget that. So, you should not let any obstacle stop you from buying a house. But at the same time, you must make sure that this process of purchasing a house should not undermine your financial well-being. Hence, even while opting for a home loan program, you should ensure that it does not become a struggle to repay the amount or much worse, you become a defaulter for the loan. 

Unsuccessful at Getting Loan Approvals? Here are the Things Which Can Change It

There are different kinds of loans that you can seek to turn your dream home into a tangible reality but you should realize that every loan comes with a set of conditions that need to be met in order to become qualified for the loan. Most of the times, one cannot avail a particular loan program is due to their inability to meet the criteria for the particular home loan in question. Here, we have jotted down some of the major reasons which prevent you from availing a home loan. Take a look.

• Lack of Down Payment

A very essential part of availing home loans is also downing a certain share of the price in advance. You cannot finance or refinance your home purchase plans entirely based on the mortgage. You have to make sure that a good amount of money is always in hand. Every loan program that you opt for will require a certain percentage of down payment. Depending on your credit score and the kind of home mortgage program you are applying for, this will be subject to change. So, you have to keep this ready whenever you are planning to buy a house. Most of the people fail to take a home loan because they do not have a large amount of money which they can pay as down payment. Although even a small amount of money is alright for the down payment, it is better to pay as much as down payment you can because it decreases the loan amount, which makes it easier to get approved.

• Outstanding Credit Card Payments

Do you make a lot of purchases on the credit card? Well, who doesn’t? Credit cards have made life much easier. You don’t have to wait to gather the right amount of savings in order to own something. Now you can do it instantly without having to pay it immediately. You can pay in installments according to your convenience. But what we don’t realize is that the payments are getting piled on one after the other. Even though you clear it on time, there is an outstanding balance that remains in your credit report all the time. This outstanding balance can create a problem in getting your loan approved if you are trying to buy a house. It basically makes your lender question your ability to repay their loan amount because you already have a heap of credit on your shoulders which needs to be taken care of at first. So, the lender is apprehensive and stops the process. It also adds to your credit history which further lowers the credit scores.

• Low Credit Scores

Last but not the least; you should understand that the credit history is of utmost importance when it comes to any loan program. Your credit report is one of the fundamental things which are checked when your loan is under approval. This is basically the record of your debts and how consistently you have paid back the loans on time. So, it is important to ensure you have a high credit score or else your loan will not get approved. In most cases, we tend to make a lot of purchases and some of them are so significant that you have to take a loan for those. And if you do so just while considering a home loan, you will be in deep trouble because it will have an immediate effect on the credit score which will put an end to all your hopes of getting the loan. 

What Can You Do about Poor Credit?

You should try to have a high credit score, arrange a lump sum down payment, and always pay off the credit card balance if you are considering applying for a home loan. However, if you feel that it is not possible for you to improve your credit history easily or gather a large sum of money as down payment, then there are solutions for that as well. There are plenty of home loans for bad credit in Houston which can solve your problem.  

1.       FHA Loans

One of the most common home loans for the first time home buyers would be the FHA home loans which are backed by the Federal Housing Administration. With their flexible loan terms such as an acceptable credit score up to 530 or even below under special allowances or the low-interest rates and the less stringent source of down payment, this is one of the lucrative options for you.

2.       VA Loans

Dedicated to the heroes of America, the loan program for the veterans and military Active-Duty Personnel, the VA loan programs are one of crucial homebuyer assistance programs which have brought many dream homes alive. With these loans, one can secure financing with credit scores starting at 500. And this does not take into account the unpaid collection accounts, the home loan foreclosures, as well as the old pending debts in the credit record while approving the loan. The only proof of eligibility you will need is the Certificate of Eligibility or COE along with qualifying factors like outstanding debts or income potential. But the benefit is the debt to income ratio can be extended to 60% if all the other factors are met.

3.       VA Jumbo Loans

The VA Jumbo loans in Texas are one of the useful home loans which offer adjustable or fixed rates with great flexibility for loan amounts that are quite large. For instance, if you want to apply for $1,000,000 loan or other Loans-to-Values for amounts ranging between $484,350 to even $3 million. These even allow you to purchase, cash-out, or rate/term options for the primary homes. Right from the leaseholds, 1-2 unit properties, to the low, high, or the mid-rise condos, and other planned unit developments, every property type can be financed by this loan option.

There are other loan programs including rural home programs, USDA, and other government-based options which can provide you with a loan despite your bad credit. If you need to learn more about these loan options or want to understand which one will be right for you, you should resort to a home loan lending site where the experienced home loan specialists can help you out.