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.
If you have bad credit, you can still use a variety of
programs to purchase a home. 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 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.
Another 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 can be helpful to many buyers because coming up with 5 to 20 percent of
the home’s value can effectively keep some buyers from being able to purchase a
home. 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 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. The most common type of subprime loan is an adjustable rate mortgage.
Why Bad Credit Loans Exist
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.
Find 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.
Government programs and incentives change almost daily so make sure that you
are working with a broker who knows about any and all bad credit loan
opportunities. 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
Dennis Dahlberg, Broker/RI/CEO
NMLS 1058389 AZMB 0923961
23335 N 18th Drive
Suite 120
Phoenix AZ 85027
623-582-4444
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