Setabay Private Hard Money Lender: Things to Consider When Shopping for Arizona Home Loans

All home loans are not created equal. Different loan programs have different risks and benefits. Knowing your options can help you choose the right Arizona home loans for your family.

If you are in the market to purchase a home in Arizona, it is important to understand what Arizona home loans products and services may be available to you. A variety of factors including income, debt to income ratio, FICO score, and the type of home you want to purchase can affect what loan product is the best for you. Knowing your options and what risks and benefits certain types of loans have will help you make an informed decision about which loan you should apply for.

The best type of Arizona home loans depend on your purpose for purchasing a property. If you are purchasing a home to be your primary residence, there are a variety of programs you can look into to finance the home. The most common type of primary mortgage is a traditional loan. A traditional loan is a 30 year fixed loan, meaning that your interest rate and payments are fixed for the life of the loan. Most lenders require a down payment of at least 5% of the home purchase price but usually it is better if you can put down about 20% of the purchase price. This will keep your payments lower because you will not have to pay mortgage insurance. One important note about traditional mortgages is that they may not be ideal for borrowers with bad credit or who are self-employed. Traditional loans are usually the most stringent type of Arizona home loans, requiring a FICO score of 650 or higher and documentation of all income, assets, bank accounts, tax records, and monthly debt obligations.

If you are denied a traditional mortgage for any reason but are still looking to purchase a home to be your primary residence, there are other programs you may benefit from. One is an FHA loan. An FHA loan is a federal lending program that has lower credit requirements than a traditional loan although it still does require the same amount of documentation. The loan is insured by the federal government so lenders are more likely to take a risk with a borrower that they may not take with a traditional loan. Be aware though that you will pay more for this risk in terms of monthly mortgage insurance. This will be added to your monthly payments and can be anywhere from 80 to over 200 dollars a month, depending on the amount of your loan.

Another option for purchasing your home is an adjustable rate mortgage or ARM. This is an especially attractive option when interest rates on traditional loans and FHA loans are high. An adjustable rate mortgage has a fixed interest rate for the first part of the loan that is usually lower than the prime rate. This means that your monthly payment is low. Once the initial term is over, the rate resets and can often go up. An ARM is a good option if you plan on being able to refinance or sell before the rate adjusts.

If you are planning on buying a home as an investment rather than a primary residence, a shorter term loan may be a better option for you. An ARM can save you money on interest while you renovate a home and then sell it for a profit before the rate adjusts. Another option for a fix and flip home is a hard money loan. This type of loan is given out by an investment group rather than a bank and is a short term loan. If you have bad credit or a high debt to income ratio a hard money loan can often be a good option because the investors look at the merit of the investment rather than just the qualifications of the borrower.

Finding an Arizona Mortgage Broker

Once you have researched some different types of Arizona home loans, an important next step is to find a qualified Arizona mortgage broker. A broker can help you navigate the ins and outs of the loan market and recommend products or loans that fit your unique needs. In addition, federal loan programs and loan types are constantly changing so it is important to find someone who can help you say ahead of the curve. Your broker can also explain all loan terms to you as well as interest, payments, and fees. The broker should be able to explain to you exactly what the credit is going to cost you each month as well as over the lifetime of the loan.