Many people make financial mistakes without comprehensive knowledge of its effects on their future. Most of these financial mistakes affect their credit rating. Though you might not think much of this, it has a significant impact when you apply for a mortgage. It is the primary determinant of your application’s outcome and the loan’s interest rates.
Applying for a loan is an ideal alternative to buying something valuable using cold cash. This is especially true if you don’t have enough cash to finance the big purchase, such as a house or a car. Getting a loan would be a more practical option at the moment because you don’t need to shell out a large amount of money upfront. You just have to pay a more affordable monthly mortgage for a certain period, which is determined by your loan terms and conditions.
PRMI Eugene and other loan companies explain that many aspects can affect your eligibility for a home loan. A poor credit rating, however, should not be your stumbling block to homeownership. There are several home loan options for borrowers in Eugene with poor credit scores who are investing in their first home. Here are some of the best ones:
FHA Loan
These loans are awarded to borrowers with a credit score as low as 580. You can put at least 3.5% of your home’s cost for the down payment, but anything below 20% requires payment of a mortgage insurance premium. To qualify for this loan, you need to have a low debt-to-income ratio. FHA loans are also available to homebuyers who have filed for bankruptcy in the past provided 1-2 years have passed since the debts were discharged.
VA Loan
This is backed by the Department of Veteran Affairs and has very low credit score requirements. The loan is open for those in active military duty, veterans, and non-remarried spouses of those who died on duty. Borrowers who qualify for VA loans require neither a down payment nor mortgage insurance. This serves as a tribute and a form of gratitude to those who serve and protect the country, as well as their families. The incentive is a good way to own a house while protecting the interests of the fellow countrymen.
USDA Loans
These are designed for those who are investing in homes in rural areas and have low or moderate incomes or poor credit. The US Department of Agriculture can also back loans for home purchases in some suburban areas. These loans come with low interest rates and can also be used for property repairs. This type of loan is ideal for those who want to live a simple life and settle in a rural community. These include farmers, retirees, and anyone who wants to live peacefully and leave the hustle and bustle of the city.
Shopping for a mortgage as a first time homebuyer is challenging. This can be more difficult if you have a poor credit score. With the above options, however, your loan approval will be much easier and you can finally live your dream of owning a house.