Setabay Private Hard Money Lender: How to buy a house with bad credit in Arizona

If you have bad credit you may find yourself wonder How to buy a house with bad credit in Arizona and it may seem impossible. However, there are a variety of loan types and programs that can help you purchase a home in the Grand Canyon State as a primary residence or as an investment.

With sunshine, desert landscapes, mountain trails, hiking, skiing, snow, and majestic views, it is no wonder that Arizona is experiencing a population boom. If you find yourself wanting to move to Arizona, you are in good company. However, if you are one of over 42 million Americans with bad credit, you may find yourself wondering How to buy a house with bad credit in Arizona. You may believe that Arizona Home Loan is beyond your reach and that you are destined to rent forever. That is simply not the case. With new federal programs and a variety of loan types there are many ways to obtain a home mortgage even if you don’t have good credit.

The first step to buying a home with bad credit is to find a mortgage broker you can trust. In Arizona, all mortgage brokers whether they work for a private investment company, a mortgage company, or are self-employed must be licensed. This means that the broker has passed a test as well as completed required coursework. In addition, if the broker works for a company, the company must also be licensed by the state. The state licensure helps to ensure that your broker is knowledgeable about current mortgage laws, rates, and programs.

Once you have found a licensed broker, you should ask them a few questions to make sure that are the right broker for you. First and foremost, you should ask about lender fees. The amount of fees will vary from lender to lender and can have a big impact on your overall closing costs. Secondly, you should ask about turn around times for processing and underwriting as well as general questions about the broker’s experience. You may want to ask how many loans they have helped close as well as what the general interest rate trends are. Thirdly and probably most importantly, you need to ask about new loan programs and How to buy a house with bad credit in Arizona. If you have bad credit, the answer to this question is very important and will help you decide if you have found the right broker for your mortgage needs.

Arizona Home Loan Programs Your Mortgage Broker Should Mention

When you ask about federal mortgage programs and How to buy a house with bad credit in Arizona, there will be a variety of answers but your broker should mention at least three types of mortgages. One type of loan you mortgage investor will most likely discuss with you is offered to bad credit borrowers is an FHA loan. An FHA loan is a government backed loan. Each month you pay extra insurance against default. The loan is secured by the Federal government so lenders are more likely to give them to borrowers with bad credit. In order to qualify for an FHA loan you will need to have 3.5% of the purchase price to put down. You will also pay extra for monthly mortgage insurance which can vary based on the amount of your loan. For many bad credit borrowers an FHA loan is a good path for homeownership.

Another type of loan that is a conventional loan. A conventional loan is a traditional 30 year mortgage with a fixed interest rates. Most current programs require at least at 5% down payment. This is the loan most often given out by banks and is usually the hardest to qualify for with bad credit. However, your broker may know of private equity companies and investors that give out conventional mortgages for sub-prime borrowers. You will usually end up paying a higher interest rate based on your low credit score, but the interest rate is fixed for the life of the loan. Also, if you plan on using on time mortgage payments as a way to rebuild your credit, you can refinance later when interest rates are low.

A third type of loan your mortgage professional will discuss is an adjustable rate mortgage or ARM. An ARM is a mortgage that has a fixed interest rate for a set period of 1 to 7 years. During that period you will pay a relatively low interest rate, usually lower than the prime rate. After the initial fixed period, the rate will reset to a higher rate and your mortgage payment will increase. Borrowers with bad credit can take advantage of this program as a way to own a home because the initial payments are low due to the low interest rates. Keep in mind that after the rate resets your payment will increase significantly. An ARM is a good option for borrowers who plan on either selling or refinancing before the rate resets.

You may also hear about hard money loans as well as privately backed equity loans if you are planning on using the property primarily as an investment.

If you are looking for an Arizona Home Loan with bad credit, contact a broker today.

A broker can help you navigate the complex world of home loans. Make sure to find a broker you can trust with expertise and experience to help you buy your home.