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
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 18th Drive
Suite 120
Phoenix AZ 85027
623-582-4444
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