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Three Common Mistakes People Make When Applying for a USDA Loan
USDA guaranteed home loans is the perfect alternative for borrowers who would like to get a mortgage but doesn't have the finances to pay any down. It is a government insured mortgage that allows eligible borrowers to get 100 percent financing on home loans without putting any money down. It is specially designed for low income generating applicants who wish to apply for a loan. This is probably why most people are so eager to apply for it. But that doesn't stop applicants from making any mistakes. Some people just get too excited that they often forget things that are rather important. Here are some of the things that most people often do when applying for a USDA home loan:
Not Getting Your USDA Loan Prequalified
One of the very first things that you need to do is to ensure if you're qualified for a USDA home loan or not. Keep in mind that the loan is specially made for low income generating applicants. Those who are above the 115 percent of the area's average generated income would have to make certain adjustments before they can even qualify. So before you start your application, make sure that you check the loan qualifications to make sure that you won't be wasting any of your time.
Lack of Savings
Although USDA backed mortgages doesn't require eligible borrowers in states like Texas to make any down payments, there are still other expenses that need to be paid. Keep in mind that the mortgage's down isn't the only charge that you need to pay when applying for a mortgage. There are still other expenses like the property inspections and the insurance fee that needs to be paid as well. It's much better to ask your lenders about the other fees included in your mortgage and ask him or her the average cost for each fee. This would at least give you a clue on how much the charge will be as soon as you're about to close the deal.
Poor Credit Score
Although the USDA is not strict when it comes to the borrower's credit score. It should still be within the USDA's acceptable mark. Most USDA approved lenders would often allow people with 640 credit scores to apply for a loan. So you have to check your credit score to make sure that you hit the mark. If not, try to see if you can improve your credit standing by making sure that your statements are paid on time and that all your debts have been cleared. Do not consume all your credits and keep your expenses at a minimum. Make sure to have all your finances straightened out at least a year before you start your USDA home loan application.