Bad Credit Home Loans, Arizona: How to Buy a House When Your Credit Is Less Than Perfect

Low credit scores or high debt to income ratios often hold people back from buying their dream home. If you have bad credit, you can still qualify for a bad credit home loan in Arizona and make your dreams of home ownership a reality.

If you have bad credit, it can seem like you are alone. You might have trouble qualifying for a car

loan, mortgage, credit cards, and even store accounts. It can be disheartening when you are trying to get ahead to constantly have a past mistake rear its head and to be defined by a number. Having bad credit does not mean that you are irresponsible. There are many circumstances that can lead to a low FICO score. Divorce tends to cause your credit score to decrease because your assets are split and there are often expensive court costs. One irresponsible use of a credit card in your youth can follow you around for years, making obtaining new credit almost impossible.

Although having bad credit may feel lonely, you are far from alone. According to a FICO survey, nearly 1 in 4 credit using Americans have a FICO score of less than 600. Basically there are over 42 million Americans with bad credit. As low credit scores are becoming increasingly common, a number of lenders offering bad credit home loans Arizona have been attracting borrowers with low credit scores. If you find yourself in the situation of having a low credit score, you probably think that owning a home is impossible. It is not. As long as you started to make smart financial decisions, getting a bad credit loan could be a great way to own a home and start to rebuild your credit history.

As with any type of loan, there are pros and cons to getting a bad credit loan. It is important to know and understand all of your options when it comes to types of loans you may qualify for. Below you will find an outline of a couple different types of loans that might work for you. Make sure that you also talk with a mortgage broker as programs and loan types change almost daily.

Types of Bad Credit Mortgages

One type of bad credit home loans in Arizona that is available is a hard money loan. A hard money loan is secured through a mortgage broker but is backed by investors instead of a bank. This is especially beneficial for people looking to do a fix and flip or short term purchase. Depending on the value of the property you are purchasing as well as potential for income, investors will often invest capital, even if your credit score is lower than what is ideal. Most hard money loans only last a maximum of 24 months as they are mostly designed for short term real estate investments.

Another loan type that is available for people with bad credit is a type of FHA loan. An FHA loan is backed by the government (the Federal Housing Authority) and will allow you to borrow about 96.5% of the value of the home you are purchasing. This means that you won’t have to come up with a large sum of money for a down payment. In addition, the government backing means that you will be more likely to qualify, even with less than stellar credit. One important note is that you will pay monthly insurance on your loan. In additional to you principle and interest payments, you will also pay a PMI insurance payment. This is basically extra money you pay to help insure against default. PMI payments can range from $80 to over $200 each month, depending on the amount of the loan.

A third type of home loan that may be available as a bad credit home loans in Arizona is a subprime loan. A subprime loan refers to a loan given to a borrower that represents a greater financial risk due to his/her credit score. A subprime loan is funded by a bank but does not have to meet the same underwriting guidelines as a prime loan. Subprime loans allow access to groups that would normally not have access to the credit market like people with low FICO scores. The most popular type of subprime loan is an adjustable rate mortgage or ARM. In an ARM, the initial interest rate is usually low but then adjusts after a period of time to above the prime rate. The low interest rate is usually locked in for anywhere from 2-5 years and can be as low as 2.5%. After the lock in period, the rate adjusts and can be as high as 10%. An ARM is a good option for borrowers who know they will have the credit to refinance to a traditional loan after the adjustable period or for borrowers who only intend to live in the home for a short period and sell the property before the rate adjusts.

Analyze the risks and rewards of bad credit home loans Arizona to determine which type of loan will work the best for you.

Working with a mortgage broker will give you the most loan options as mortgage brokers can shop different banks and lenders to find the best deals and programs. A broker can also make sure you know all the options available to you so that you can make an informed decisions to buy a home and start rebuilding your credit history by making on time mortgage payments.

Level 4 Funding LLC

Dennis Dahlberg, Broker/RI/CEO

NMLS 1058389 AZMB 0923961

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Subprime Mortgage Arizona: Home Loans Available to Borrowers with Bad Credit

A subprime mortgage,Arizona is one type of home loan that is available to Arizona borrowers with a low FICO score. Learn all the details of subprime lending to determine the right loan for your unique credit situation.

Many potential homeowners with low FICO scores find themselves denied by banks when they try to qualify for a mortgage. Nearly 1 in 4 Americans have a FICO score of less than 640 which is considered to be a subprime credit score. With a subprime score it can be difficult to qualify for a traditional home loan. However, there are other options available for a subprime mortgage Arizona. Certain loan types and programs can help borrowers with low credit scores qualify for a home loan.

One loan type that is available for subprime borrowers is a bad credit FHA loan. An FHA loan is backed by the Federal Housing Authority and will allow you to borrow about 96.5% of the value of the home you are purchasing. This means that you won’t have to come up with a large sum of money for a down payment. In addition, the government backing means that you will be more likely to qualify, even with less than stellar credit. This is because the government helps secure the loan for the bank in case of default. One important note is that you will pay monthly insurance on your loan. In additional to you principle and interest payments, you will also pay a PMI insurance payment. This is basically extra money you pay to help insure against default. PMI payments can range from $80 to over $200 each month, depending on the amount of the loan.

A second type of loan available to borrower with bad credit is a subprime mortgage Arizona. A subprime loan refers to a loan given to a borrower that represents a greater financial risk due to his/her credit score. A subprime loan is funded by a bank but does not have to meet the same underwriting guidelines as a prime loan. Subprime loans allow access to groups that would normally not have access to the credit market like people with low FICO scores. The most popular type of subprime loan is an adjustable rate mortgage or ARM. In an ARM, the initial interest rate is usually low but then adjusts after a period of time to above the prime rate. The low interest rate is usually locked in for anywhere from 2-5 years and can be as low as 2.5%. After the lock in period, the rate adjusts and can be as high as 10%. An ARM is a good option for borrowers who know they will have the credit to refinance to a traditional loan after the adjustable period or for borrowers who only intend to live in the home for a short period and sell the property before the rate adjusts.

Bad Press and Subprime Mortgages

Although a subprime mortgage can be a valuable tool in helping secure a home loan, many borrowers shy away from them due to recent negative press. Specifically, in Arizona, many politicians have gone as far as to label subprime mortgages as predatory lending practices. They claim that subprime loans are designed to charge high interest rates for people who cannot afford them.  Proponents of subprime mortgage Arizona programs claim that subprime loans allow individuals access into the home marker who would otherwise be shut out due to credit history.

So, who is right? Is a subprime loan a predatory tool used by banks, or is it a legitimate loan program to help bad credit borrowers?

One argument made by politicians looking to discredit subprime lending in Arizona is that it unfairly discriminates against low income borrowers. This is simply not true, most subprime borrowers in Arizona are above the median income line. Most subprime mortgages tend to be second mortgages that are purchased as investment properties. Subprime borrowers also own fewer low value homes than traditional mortgage holders.

A second claim against subprime ortgage Arizona is that minority borrower will be discriminated against and only offered high interest loans. A demographic study indicates that this is untrue. By analyzing zip codes and demographics, it was concluded that subprime mortgages are not more common in zip codes with a Hispanic population concentration.

Finally, another criticism is that subprime loans are unfairly given out to borrowers who are young without a substantial credit history. Subprime mortgages are not given out to mostly young borrowers. In fact, the average age of a borrower for a subprime mortgage was between 35 and 55 years of age. This indicates that subprime mortgages are not being used to penalize borrowers with insufficient credit history due to age.

When you examine the numbers, it becomes apparent that a subprime mortgage is not used by lenders to make money from the lower class.

Rather, a subprime mortgage is a tool that can help individuals with bad credit access the home buying market. If your credit score is less than 640, don’t lose hope. Contact a mortgage broker to discuss your subprime and non-traditional loan options.

Dennis Dahlberg

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

NMLS 1057378 AZMB 0923961

623-582-4444

www.Level4Funding.com

Sub Prime Mortgages Arizona: Facts, Statistics, and How to Qualify

Subprime mortgages in Arizona have been considered a predatory lending practice by many law sub prime mortgages Arizona have typically been used by investors as a money making strategy, not by people who have been taken advantage of by banks.

makers. The facts show otherwise as

A subprime mortgage is a lending practice that can benefit borrowers with low credit scores. Typically, sub prime mortgages are given to borrowers with a less than stellar credit history or to borrowers with other financial factors that make them too much a liability for a traditional loan. Based on these factors, the borrowers would not qualify for a traditional mortgage so banks give them a subprime loan with a higher than average interest rate. Because subprime borrowers represent a higher risk for the lender, most lenders charge a higher than prime interest rate.

The most common type of subprime mortgages that are offered are adjustable rate mortgages or ARMs. An adjustable rate mortgage initially offers a very low interest rate, usually below the prime rate offered by a traditional loan. For an informed investor who intends to fix and flip or only own a home for a short period of time, an adjustable rate mortgage can be a great investment tool. However, an ARM is somewhat misleading to uninformed borrowers as it initially charges a lower interest rate. After the ARM period the rate adjusts to a significantly higher rate and higher monthly payment. These types of mortgages were given out frequently by banks to un-creditworthy buyers in 2005 and 2006. Once the loan reset to the higher interest rate, many borrowers were unable to afford their new monthly payments and defaulted on their home loans. ARM were largely responsible for the increase of subprime mortgage foreclosure increases in the mid-2000s.

In response to the foreclosure crisis, may law makers want to eliminate sub prime mortgages Arizona entirely. They cite these types of loans as being predatory lending practices as the interest rates can reach as high as 9% when a traditional loan hovers around 4%. They also claim that these loans are disproportionately given to people who make less than the median level of income and there is also fear that subprime mortgages could hurt minorities or young people.

Facts about Subprime Lending in Arizona

As stated above, there is concern among law makers that sub prime mortgages Arizona are designed by banks to gain the most money from groups who have the least. The foreclosures of the mid-2000s helped fuel this fire. Politicians and loan reform groups make a variety of claims about the unsavory nature of subprime lending in Arizona, however, many of these claims have been proven inaccurate when the numbers are examined.

The first claim by politicians looking to discredit subprime lending in Arizona is that it would unfairly discriminate against low income borrowers. This claim is categorically false. In fact, most subprime borrowers in Arizona are above the median income line. Most subprime mortgages tend to be second mortgages that are purchased as investment properties. Subprime borrowers also tend to own fewer low value homes than traditional mortgage holders.

A second claim against sub prime mortgages Arizona is that minority borrower will be discriminated against and only offered high interest loans. A demographic study indicates that this is untrue. By analyzing zip codes and demographics, it was concluded that subprime mortgages are not more common in zip codes with a Hispanic population concentration.

Finally, another criticism is that subprime loans are unfairly given out to borrowers who are young without a substantial credit history. Subprime mortgages are not given out to mostly young borrowers. In fact, the average age of a borrower for a sub prime mortgage was between 35 and 55 years of age. This indicates that subprime mortgages are not being used to penalize borrowers with insufficient credit history due to age.

Subprime mortgages are not being used by banks to unfairly discriminate against borrowers, rather than are a valuable tool for borrowers with low credit scores or as a means to purchase an investment property.

Since subprime mortgages often charge higher interest rates, they have unfortunately been lumped into the same category as title or payday loans. Some politicians see them as predatory practices without having all the facts.  Sub prime mortgages Arizona are not a predatory lending practice by banks. Rather they are a tool that can be used for borrowers that would otherwise not qualify for a mortgage. Whether you are purchasing a second home as investment, or buying a home for your family to live in, don’t let a low credit score determine your fate. Contact a local mortgage broker to determine your options and see if a subprime loan is a good option for you.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Bad Credit Mortgage Arizona: How to Qualify for a Home Loan

There are a variety of circumstances that can lead to a low credit score. Learn how you can get a bad credit mortgage Arizona and qualify for a home loan, even if your credit is less than perfect.

There are a variety of factors that can lead to a lower credit score. Job loss, divorce, a sudden change in income, or even an old credit card you forgot about can cause your credit score to suffer. Recent statistics released from FICO Inc. show that 25% of the 170 million Americans with active credit

accounts have a FICO score of less than 600. This is considered a low credit score and if you have a low score, you can have trouble getting credit cards, car loans, and even store credit accounts.

If you are one of the 42.5 million Americans with a low credit score, you probably assume that home ownership is beyond your reach. However, with new bad credit mortgage Arizona programs as well as federal programs, borrowers can qualify with low FICO scores.

As with any mortgage it is important to analyze the risks and benefits of a low credit mortgage. Once you have decided to stop letting your FICO score hold you back, it is important to know your options. Most likely you will not qualify for a bad credit mortgage through a bank, so it is important to find a reputable mortgage broker. A broker has more flexibility in terms of types of loans that can be offered so you are more likely to qualify via a broker than a bank.

Types of Bad Credit Mortgages

Once you have decided to seek a home loan, there are several different programs and types of loans available to you. You will need to do your research and choose a loan based on your goals (both short term and long term), and unique credit and money situation.

One type of loan that is available for people with bad credit is a type of FHA loan. An FHA loan is backed by the government and will allow you to borrow about 96.5% of the value of the home you are purchasing. This means that you won’t have to come up with a large chunk for a down payment. In addition, the government backing means that you will be more likely to qualify, even with less than stellar credit. One important note is that you will pay monthly insurance on your loan. In additional to you principle and interest payments, you will also pay a PMI insurance payment. This is basically extra money you pay to help insure against default. PMI payments can range from $80 to over $200 each month, depending on the amount of the loan.

Another type of bad credit mortgage in Arizona that is available is a hard money loan. A hard money loan is secured through a mortgage broker but is backed by investors instead of a bank. This is especially beneficial for people looking to do a fix and flip or short term purchase. Depending on the merit of the property you are purchasing as well as potential for income, investors will often invest capital, even if your credit score is lower than what is ideal.

A third type of home loan that may be available as a bad credit mortgage in Arizona is a subprime loan. A subprime loan refers to a loan given to a borrower that represents a greater financial risk due to his/her credit score. A subprime loan is funded by a bank but does not have to meet the same underwriting guidelines as a prime loan. Subprime loans allow access to groups that would normally not have access to the credit market like people with low FICO scores. Subprime loans often have higher interest rates than conventional loans to compensate for their higher credit risk.

Make sure to know your options for home loans with bad credit.

Once you have decided to stop letting your credit score define your home ownership goals, find a broker to work with. Finding a mortgage broker that specializes in bad credit mortgage Arizona will ensure that you are receiving all the options to make owning a home a reality. A mortgage broker will help you understand the ins and outs of each type of loan in more depth and help you find the best loan for your financial situation. A broker will also be able to give you the most up to date information about new state and federal programs that will help put home ownership within your reach. Don’t let your FICO score stand in the way of owning a home. Reach out to a licensed mortgage broker today.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Why Do You Need a Stated Income Mortgage?

There are many ways to purchase a home. Of course you may need a down payment along with a mortgage. There are many different types of mortgages that you can apply for depending on your financial circumstances.

If you have a typical office job with documented proof of income such as pay-stubs, W-2’s or 1099 forms, you

can easily apply for a mortgage loan from a local bank. However if you are an individual that owns a business or has any other alternative source of income it may be harder for you to be approved for a mortgage loan.

For example, as a small business owner you know it is hard to supply a proof of income. When securing a loan you may be able to supply tax returns or bank deposits. However according to most reputable banking institutions, supplying tax returns or bank deposits are still not enough to prove a stable income.

Government-instituted banks want to know if your income is stable enough to pay off your loan payment every month. They see your profession and fluctuating income as a “high risk” situation. Due to your uncertain fluxes in income, banks do not wish to be held responsible if you have to default on your mortgage.

Here’s the dilemma: You are a real estate agent and see a dream of a house that you would like to buy. You have only been in business a little over a year. Therefore you cannot even supply the common 2 years worth of tax returns. You have made regular deposits to a checking account and hope that the deposits will be enough to be approved for a loan. Unfortunately the mortgage options available at your local banks are stringent about checking proof of income, and will not accept any bank statements. What do you do?

This situation doesn’t sound fair, but you still have a chance to turn your dream home into a reality. Forget typical banks for the moment and apply for a stated income mortgage loan instead.

  

What is a stated income loan? 

A stated income mortgage loan is a home loan that requires no proof of income other than the income you officially claim or state. The income you claim is the income you have according to the mortgage lender. And the amount of money you receive will be based on the amount of income that is stated.

A stated income loan is also known as an alternative or no-doc loan, which ultimately means “no document”. Yes “no documents” are needed, as in the official documents typically used to prove income at a banking institution.

 

This is perfect for borrowers that have the ability to pay off a loan but are in a complicated financial dilemma – they are self-employed, they are business owners, they are real instate/investment agents, etc.

Of course it is best to apply for a stated income mortgage if you know you are able to pay off the loan within its intended time frame. Considering most individuals that apply for a stated income loan are simply unable to supply proof of income, this shouldn’t be a problem. However it is advised to only claim the amount of income closest to what you’ve made in the past. If you cannot estimate past income, make an educated assumption of future income.

Are you self-employed and having trouble getting approved for a home loan?

Consider applying for a stated income mortgage loan.

Pick up the phone and contact Dennis at Level 4 Funding:  623-582-4444. As the home loan experts in Arizona, we will give you the advice you need to get approved.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

I Want to Buy a Home - Bad Credit Home Loans in Arizona

You’re in love with a home you just spotted, or you want to stop paying rent and start building equity. But to put it simply, your credit rating is in the toilet. How do you go about getting approved?

Meet Anne. A single mom with two kids that wants to buy a modest home in the suburbs. However

do to her unfortunate past, she is unable to secure a home loan from the bank. Why is this?

In order to qualify and secure a home loan from a bank, a bank must look at your credit rating to see if you are a prime borrower candidate. Due to Anne’s past of a defaulted loan from a failed business venture, her credit is less than satisfactory.

Besides business failures, other black marks resulting in bad credit can also come from events such as divorce, injury, job loss, or other untimely circumstance. Any of these issues are possible in creating financial problems that prevent you from buying a home.

There are no bank-approved options for bad credit home loans in Arizona. Even if you have a significant amount of cash reserved for a down payment, banks are hard pressed to offer home loans to a borrower with poor credit. However contrary to common belief, you don’t have to go to a bank in order to retrieve a loan for the home you want.

So what options are available besides borrowing from the bank? Is there such thing as applying for bad credit home loans in Arizona?

If you have bad credit then obtaining a loan through a private or specialist lender is an excellent option. Unlike banks, private lenders are more flexible when it comes to poor credit history. These lenders have options available when it comes to obtaining bad credit home loans in Arizona. Private lenders offer bad credit loans (also known as sub prime loans). Bad credit loans can get you in the house you want immediately.

I am interested in getting approved for a bad credit home loan. What are the requirements for obtaining this kind of loan?

Despite having a low credit score, you can apply for an approved home loan. Though in order to get approved for this type of loan, you must have a higher down payment readily available. The down payment amount will usually more be than the standard 20% of the listing price. In addition, these types of home loans for people with poor credit will often also have higher rates.

Anne and her family are interested in purchasing a house right away. She doesn't want to wait to buy a home but has enough substantial cash for a sizeable down payment. She also has a secure job and is confident she can pay off her mortgage responsibly. Applying for a bad credit loan or sub prime loan will work for her.

Similarly, if you are someone that has money for a large down payment but shoddy credit, securing a bad credit home loan is a desirable option.

Sounds like a bad credit home loan is for me. How do I apply?

The only way to know for certain if you qualify for a loan with bad credit is to talk to an actual lender. Level 4 Funding has a lot of options when it comes to obtaining home loans with bad credit. Let the professionals at Level 4 Funding aid you in securing a your home loan.

Call today at 623-582-4444 to schedule an appointment with Dennis. We will go over your individual financial circumstances and offer you’re the best advice in qualifying for a loan.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Using Trust Deed Investing to Fund Your Child’s Education

Trust deed investing is a little known high yield investment opportunity. With rates of return as high

as 12%, it can be a great way to fund your child’s college education. As a parent, your child’s future is always on your mind. One of the biggest concerns for most parents is how to pay for college. With rising tuition costs, books, housing, and other details, the cost can really add up. In fact, reports from the College Board indicated that the tuition cost alone can be upwards of $20,000 for a four year degree. This is for in-state tuition. This number rises dramatically with out of state schools and private institutions. For most families, this is a number that seems out of reach. However, with the right investments you can grow your money in such a way as to make paying for your child’s college education an attainable goal.

One type of investment that many parents take advantage of is bonds. There are a variety of different types of bonds that can be purchased from the United States government. Depending on the bond type it takes a specified amount of time to mature. Once the bond is matured the government will purchase it back for a guaranteed interest rate. Bonds are extremely safe investments as they are backed by the U.S. Department of Treasury. The main downfalls of bonds are that they earn fairly low interest rates, usually in the single digits and often as low as 2%, and they take a significant amount of time to mature. Bonds are a safe investment but don’t offer very high or timely returns.

Another investment that many parents use is a stock investment. With this type of investment an investor purchases parts, or shares, of a company. When the company makes money, so does the investor. If the company loses money, so does the investor. The risks and rewards of stock investing varies by the specific companies the investor chooses to invest in. There is not insurance against loss. To help make this investment less risky, investors can do their research. Make sure they know about the finances of the company they are investing in and choose companies that show stability over time.

A third investment that can help earn funds for college at a very high interest rate is known as trust deed investing. In this type of investment, the investor purchases an interest in a mortgage that is given by a bank. The borrower purchases a property, the bank lends money, and the investor (known as the trustee) invests money for the privilege of holding the financial deed to the property.  The trustee holds the deed for a specified amount of time from months to years, depending on the terms of the investment. As long as the trustee holds the deed, he/she earns interest from the bank and has almost no responsibilities as long as the borrower is current on payments. Interest rates on trust deeds are between 9 and 12 percent.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Minimizing Risk When Investing in Deeds of Trust

Like all investments, investing in trust deeds does has an element of risk. The main risk for the trust deed investor is that the borrower will default on his/her loan. If the borrower stops making payments, it is then the responsibility of the trustee to sell the property on behalf of the lender. This process is called non-judicial foreclosure. Once the property is sold, the lender takes back its initial investment. If there is any money left over, the trustee is then paid.

If you are interested in investing in deeds of trust, there are a number of steps you can take to insure that you are making a safe investment. First and foremost, make sure that you work with a reputable, established lender. A bank or mortgage broker that has been around for a while with a good reputation doesn't give out loans to borrowers who are not able to repay them. Of course there are always exceptions, but generally reputable lenders are more selective with their loans than lenders who are just starting out.

Secondly, when you are investing in trust deeds, you can help insure you money against loss by having a fair and accurate appraisal before the borrower purchases. If the property is appraised well then you can be confident of its value moving forward. Then if the borrower does end up defaulting on the loan, you can sell the property for a high enough price to pay yourself back. This is perhaps one of the greatest benefits of trust deed investing because your investment is backed by real estate that has real monetary value, not just company profits like a stock. You can use the real estate to recoup your funds if necessary.

Trust deed investing is a great investment tool to earn high interest rates with little risk of losing money because your investment is backed by real estate.

Make sure to talk with a broker before you attempt investing in deeds of trust. A broker can work with you to find the best loan lengths, terms, and interest rates. He or she can also help you navigate the ins and outs of the specific laws and regulations in your state.

Dennis Dahlberg

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

 

The Basics of Trust Deed Investing

Many smart investors incorporate the strategy of investing in deeds of trust as an easy and relatively low risk way to help grow their retirement accounts. With rates of return as high as 12% and real estate collateral, investing in trust deeds can be a good addition to a well-rounded investment strategy.

Trust deed investing is an investment tool that can help many people reach their monetary goals for invest in deeds of trust, it is important to understand the basic types of mortgages available and why trust deed investing is a win/win situation for all parties involved.

retirement. It is a useful addition to your retirement investing strategy because it is relatively low risk and low maintenance with a high rate of return. Before deciding to

The first type of mortgage is what is known as a true mortgage. In this type of real estate transaction, the borrower purchases a property with funds that are supplied by a bank or other lending institution. The legal and equitable deeds to the property both belong to the borrower as the owner of the property. This can pose an obstacle to the lender should the borrower default on his/her loan. Since the borrower holds the deed to the property if he/she defaults the lender must go through what is known as the process of judicial foreclosure. This involves the lender obtaining a court order before the home can be sold without the borrower’s consent. This can be a lengthy and expensive process for the lender.

The second type of “mortgage” situation involves a deed of trust. In this lending situation, there are three parties involved, the lender, the borrower, and a third party known as the trustee. The trustee purchases a deed of trust from the lender which gives him/her the right to hold the legal deed to the property on behalf of the lender. Deeds of trust can be purchased for anywhere from $1,000,000 and up. Once the trustee buys the deed, he/she is said to be investing in deeds of trust. Like any investment, the trustee earns interest from the lender.

The interest rates earned on deed of trust investments 

are typically higher than other types of investments. 

Some investors earn as much as a 12% rate of return on their investment. As long as the borrower continues to pay his/her loan to the lender, the trustee earns money for the term of the investment with no further work.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Trust Deed Investing with Limited Resources

One common misconception about trust deed investing is that it can only be done by the very wealthy. This is not true. There are many lower cost options for budgets of almost any size. If you are on a budget, you might consider pooling your resources with a friend. Make sure that you both agree on the property and borrower that you are investing in and you can split the monthly interest payments. This is a way to purchase a larger deed of trust without investing more money. Some brokerage firms also offer trust deed investing pools where you can combine your resources with other to make a larger investment.

In addition, you can look into investing in lower value deeds of trust. Things like cemetery plots can actually be a great deed investment and they are usually less expensive because they are smaller and less valuable than a larger property or house. In some cases and states it is also possible to do partial trust deed investing also know as Fractional Trust Deeds. Basically you would purchase a part of a deed for a shorter period of time like 12 months compared to several years. You can also look into investing in deeds of trust that have been defaulted. This can be a great way to get into trust deed investing but is a very specialized niche. It is usually more risky but the investments are cheaper and often the returns are quite high.

Trust deed investing is a great investment tool to earn high interest rates with little risk of losing money because your investment is backed by real estate.

Make sure to talk with a licensed broker before you attempt investing in deeds of trust. A broker can work with you to find the best loan lengths, terms, and interest rates. He or she can also help you navigate the ins and outs of the specific laws and regulations in your state. Your broker can also help you invest your limited funds in the smartest way possible to earn the highest returns.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Foreclosure and Trust Deed Investing: What You Need to Know

Investing in trust deeds is generally considered to be a fairly safe investment strategy. Like any investment, there are risks, and knowing how to protect yourself and your money is a crucial step in having a successful investment.

Investing in deeds of trust is a great way to earn high, fixed interest without having to do much work.  is a specific type of real estate investment where the investor invests money as a third party in the mortgage process. The bank or lender loans money to the borrower, the borrower repays the money to the bank and the property is secured by a Deed of Trust.  The Deed of Trust gives the Trustee (a third party) the ability to sell the property if the borrower defaults.  As an investor you can purchase the Deed of Trust from the lender and then you become the bank and receive the payments.   Interest rates a generally higher than most other investments at anywhere from 9 to 12 percent. Deeds of trust are a fixed investment so you earn that interest rate over the length of your investment.

Investing in deeds of trust

Now that you know the benefits of investing in trust deeds, you are probably wondering how exactly

it works and what your role as the investor is. As the investor, you invest money to hold the legal deed to the property as was discussed previously. You do not live at the property nor do you have to maintain it, the borrower does this and he/she holds the equitable title to the property. If the borrower makes payments on time, all the lender has to do is earn interest from for the length of the investment term. Investment terms can cover anything from a few months to several years. Interest is fixed and paid monthly as additional, relatively stable source of extra income.

However, as with any investment there is some risk associated with trust deed investing. The greatest risk is that the borrower will stop making monthly payments. If this happens, you as the trust deed holder, will begin to initiate the process of foreclosure on the property. The trustee has the power to sell the property for the lender. If the property is sold for a loss, the trustee will lose his/her initial investment.

Protecting Your Money during Trust Deed Investing

Although it is rare, defaults do happen and it is important to take every step necessary to secure your initial investment. One of the best rules of thumb is to never invest in a trust deed on a property you would not want to own. This does not mean that you want to live there, but that you could see the benefits of owning it as a rental, or it is in a desirable location, or has some other feature that gives it extra value. You also need to work with a good team that involves an appraiser. An accurate appraisal on a property helps make sure that it can be sold for the value of the loan, should a foreclosure situation arise. As long as the lender can recover its funds, anything left over will pay back your investment before transferring to the borrower.

Another key to protecting your money is to make sure that the property is always covered by a comprehensive hazard insurance policy. Fires, floods, and other natural and man—made disasters happen. If the home is destroyed, and insurance policy will help pay back both the lender and trustee. Make sure that the hazard insurance is current and sufficient on any properties that you are investing in trust deeds for.

Finally, you can help protect your money by always holding the first deed of trust on a property. Some lenders sell additional shares of trusts in the form of second or even third trust deeds. Basically what this does is put you in a line to be paid back in the event of default. The first trust deed holder is always the first to be paid back their investment if the loan defaults. Second and third trust holders often never recoup their funds.

Finding the right broker can make all the difference in trust deed investing.

Make sure that you are using a broker or firm that knows the ins and outs of trust deed investing. Ask about the team of Realtor, appraisers, home inspectors, and other professionals they work with to secure you investment. Also, make sure that they know you are only interested in being the first deed holder on any trust deed investments. Do your research about applicable laws and special circumstances to help protect your money.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

The Benefits of Investing in Deeds of Trust for You

Trust Deed Investing and You

One little known but high return investment strategy called trust deed investing can be a crucial investment for experienced investors to grow their investment portfolio. Investing in deeds of trust is a specific type of real estate investment wherein the investor, or trustee, invests money as a third party in the mortgage process. The bank or lender loans money to the borrower, the borrower repays

the money to the bank, and the trustee invests money directly to the lender in order to act a third party intermediary and hold the legal title to the borrower’s property. The lender then pays the trustee interest for holding the title. Interest rates a generally higher than most other investments at anywhere from 7 to 12 percent.

Not only does trust deed investing yield a high rate of return, it is also a rather low risk investment. The monetary investment is backed by the actual real estate purchased by the borrower. An accurate and thorough appraisal ensures that the property is actually worth the money that has been invested in it. If the borrower defaults the investor’s funds can be recovered by the sale of the property. In some cases, the investor can even take over payments from the borrower and acquire the property without an additional sale. This way there are no escrow fees, additional inspections, or closing costs.

Now that you know the benefits of investing in trust deeds, you are probably wondering how exactly it works and what your role as the investor is. As the investor, you invest money to hold the legal deed to the property. You do not live at the property nor do you have to maintain it, the borrower does this and he/she holds the equitable title to the property. If the borrower makes payments on time, all the trustee has to do is earn interest from the bank for the length of the investment term. Investment terms can cover anything from a few months to several years.

The Bank’s Role in Trust Deed Investing

A common question about trust deed investing is what is in it for the lender. This is a valid question because banks generally don’t like to give away 12% interest rates for free. In order to understand why the bank would engage in trust deed investing, it is critical to understand the two types of mortgages in the United States.

The first type of mortgage is a true mortgage wherein the only parties involved are the bank and the

borrower. The borrower holds the legal title to the property they purchase. If the borrower defaults on mortgage payments, the bank has to take judicial action against the borrower by actually suing them in a court of law. Only after the court has ruled in their favor can the bank take possession of the property via foreclosure. This is a lengthy process and can get quite expensive.

In trust deed investing, the trustee holds the legal title to the property and is paid interest by the bank for doing so. In the event of a default in payments by the borrower, the trustee can take legal possession of the property via foreclosure without judicial action. The bank can then sell the home quickly to recover their investment as well as the investment of the trustee. This is a much shorter foreclosure process and saves the bank money in the event of defaulted payments.

Investing in deeds of trust helps the lender protect their collateral while earning money for the trustee. The trustee’s investment is also protected by the actual physical real estate.

Investing in trust deeds is a high interest, low risk investment strategy. If the borrower pays on time, the investor literally does nothing other than collect interest. If they borrower defaults, the property that the borrower is making payments on helps to secure the trustee’s investment. This is perhaps the greatest benefit of trust deed investing. The investment is actually backed by physical collateral that the investor could literally drive by and see. The investor can also do a number of things beforehand to help secure his/her investment. The investor can use credit scores of borrowers to determine the riskiness of a particular loan. In addition, the property will be appraised to ensure that it can be sold to recover the investment if necessary. A further investment safe-guard is the requirement of all borrowers to obtain sufficient hazard and fire insurance. This protects the investor in the event of the property being destroyed.

If investing in deeds of trust sounds like a good investment opportunity to add to your portfolio, contact a broker that specializes in real estate investments. A broker can help you make the best investment decisions and help you start earning high interest rates with trust deed investing.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com

Understanding - What Is Trust Deed Investing?

What Is Trust Deed Investing?

Investing in deeds of trust is a little known but very effective investment strategy for real estate investors. With high rates of return and real collateral, investing in trust deeds is an easy, and

generally low risk way to earn money.

In the United States, there are two types of real estate transactions, true mortgages and deeds of trust sale. In a true mortgage sale, there are two parties involved, the bank or lender, and the borrower. The borrower is given the deed to the property he/she is purchasing and the lender has very little security or collateral. A second form of real estate investing is called trust deed investing. This type of investing differs from a true mortgage in that there are always three parties involved, the bank or lender, the borrower and a third party who is investing his/her personal capital in the deed of trust. For the savvy investor, investing in deeds of trust can be an opportunity to earn high interest rates with low investment risk.

Very few investors know about this investment opportunity related to investing in deeds of trust in real estate transactions. During trust deed investing, an investor acts as a third party during a home purchase transaction. The bank loans the money, the borrower purchases the property and repays the loan, and the investor, or trustee holds the deed to the property. The trustee holds the legal title to the property and the borrower holds the equitable title to the property. The trustee holds the deed as security to ensure the repayment of the debt to the lending bank and the bank pays the trustee interest for this service.

Trust deed investing boasts high rates of returns on investment and can fit almost any budget. An investor typically earns anywhere between 7% and 12% on trust deed investments. This is significantly more than any savings account and most stock options. In addition, investing in trust deeds is generally considered to be a fairly safe investment strategy because the investment is backed by actual real estate collateral. An investor can literally drive by and see his/her investment. The trustee can also help insure his/her investment in trust deeds by having property appraisals and working with a licensed broker for the transaction. Another way to secure the investment is to invest only in the first position in the deed of trust. The first position ensures that this trustee will be paid first in the event of a default.

Benefits of Trust Deed Investing For the Lender

As discussed above, in a true mortgage, the borrower holds the deed to the property. If the borrower defaults, this can become messy for the lender. Since the borrower holds the deed, the lender actually has to take judicial action against the borrower the borrower defaults. The lender sues the borrower for the deed to the property. As with any legal action, this takes time and costs money. There is also always the risk that the court will side with the borrower, leaving the lender with no recourse and a very large investment lost. Once the lender has the deed and legally owns the property, the lender sells it, usually for a loss, causing the lender to spend money twice. Once on the law suit, and once in the form of unloading a foreclosure property.

In a trust deed investment, the trustee holds the deed to the property. The trustee has invested a certain amount of money to hold the deed and the lender pays the trustee interest for this service. In the case of trust deed investing, if the borrower defaults on their loan, the trustee sells the property on behalf of the lender. The lender does not have to sue the borrower or wait for a judge to make decisions about who has the right to sell the property. There is also no risk that a judge could side with the borrower. The sale is generally quicker and results in a smaller net loss for the lender. After the sale, the trustee retains his/her initial investment as long as the property was not sold for a loss. The lender also gets their investment back.

Investing in deeds of trust is usually a win/win situation for the lender and trustee. The trustee earns interest while the lender protects their collateral.

If you are interested in learning more about trust deed investing, contact a local broker to find out different options in your state. A broker can help you navigate the trust deed world to find the right investment for your budget. A broker will also have a deeper understanding of specific laws and regulations in your state. Once you a ready to take the plunge, investing in trust deeds can be a very secure investment strategy to help grow your personal wealth.

Level 4 Funding LLC

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com