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.

Stop waiting to make your dreams come true.

                Find an Arizona Mortgage Broker and start looking into Arizonahome loans to purchase your dream home today!

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

How to Avoid the Pitfalls of Bad Credit Arizona Mortgage Loans

Arizona home loans for bad credit have gotten a bad reputation in the last 8 years and have been blamed for causing the housing market crash of 2008. Knowing the ins and outs of each loan type as well as any potential pitfalls can help borrowers with bad credit make an informed decision and choose a responsible loan product.

In 2008, the housing market crashed. Foreclosures were up, home values were down, and some notable lenders like Freddie Mac, Fanny Mae, and many banks were accused of giving out predatory loans, selling bad loans, and even fraud. New government regulations attempted to crack down on sub-prime lending and keep consumers safe. However, many of these regulations effectively shut out borrowers with credit scores of less than 700, making it impossible to get Arizona mortgage loans to purchase a home.

Since 2008, many regulations and requirements have been loosened and there is more flexibility in the lending market and sub-prime loans are making a comeback. This is good news for borrowers with bad credit because it will allow them to purchase a home. With various banks and other lenders giving out Arizona mortgage loans to borrowers with credit scores as low as 500, the housing market has opened its doors to a much wider and more diverse segment of the population.

With bad credit loans making a comeback, it is important to remember that not all loans are created equal. If you are in the market for Arizona mortgage loans with bad credit, understanding the terms of your loan as well as taking certain steps to help mitigate risk factors will help you make sure that you are choosing a legitimate loan and will not have your home foreclosed on.

Ways to Risk Less with a Arizona Bad Credit Loan

The first, and arguable most important way to minimize your risk is to know the exact terms of your loan. Adjustable rate mortgages were blamed as a major culprit of the foreclosure crisis. This is because after the initial term of the loan, the interest rate on the mortgage increases and so does the monthly payment, usually going fairly high. Many homeowners were unable to make the new higher payment and could not refinance due to declining home values or a bad credit score, so they were ultimately foreclosed on. An adjustable rate mortgage is still a viable option for borrowers with bad credit, but make sure you know the exact terms of the loan. Know your initial interest rate, when it will adjust, and its lifetime cap for how high the interest rate can go. Make sure that you will either be able to refinance before the rate adjusts or will be able to make the new, higher payments. This will help minimize your foreclosure risks.

Another way to help bad credit borrowers risk less is by having an accurate appraisal before purchasing a property. If your home is worth less than when you bought it, you will not be able to refinance even if you have good credit. Although it is impossible to predict what home value trends will do, you can help your investment retain its value by having an accurate appraisal. Also, make sure that you work with a real estate agent who understands market trends. A good realtor will steer you away from homes in areas of town that traditionally lose value over time. Choosing the right home is as important as choosing the right home loan.

Finally, you can reduce your risk of choosing a bad loan by working with a mortgage broker. A broker who specializes in Arizona mortgage loans for bad credit borrowers can help you weigh the pros and cons of multiple loan types to choose the most stable and least risky loan for your situation. Your broker will also be able to help you calculate current and future monthly payments and interest rates.

Do your homework and find the right Arizona Mortgage Broker.

Make sure that your broker has experience in bad credit lending and can clearly explain any and all loan options to you. Also make sure that he operates under a valid broker license and can give you the names of a few different clients to use as references. Finding the right broker is an important first step in the home loan process.  Your broker will be there to help you through the loan qualification process from the initial application to being handed your keys. 

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

Arizona Home Loans: How to Buy a House with Bad Credit

If you have bad credit you may find it difficult to buy a home. By being proactive and taking certain steps to repair your credit, you can find Arizona home loans that will help make your dreams come true.

Bad credit can follow you around like a dark cloud. It can make getting a car loan, credit card, and even a job difficult. Bad credit can also become a vicious cycle. You need to repair your credit by making on time payments, not one will give you the opportunity to make on time payments so you bad credit stays bad. You may begin to feel that the situation is hopeless.

One way to help rebuild your credit is by purchasing a home and making on time mortgage payments. If you have bad credit this can seem like a pipe dream, but there are a variety of ways and programs to help borrowers with bad credit get Arizona home loans. Since the housing crisis of 2008 there has been a rumor that only borrowers with pristine credit can be approved for home loans. This is simply not true. With banks and lenders relaxing their credit requirements, more home loans are being approved at lower borrower credit scores. Some programs will even approve borrowers with a score as low as 500 as long as the borrower has some cash for a down payment.

If you have bad credit and are thinking about applying for Arizona home loans, there are a few steps you can take to help make sure that you will qualify. First, and most importantly, make all of your rent payments on time. 12 months of on time rent payments can help immensely when a lender is trying to decide if you are worth the risk in terms of a mortgage investment. In addition, start saving cash. Although credit scores are a piece of the mortgage approval puzzle, they are only a piece. Money talks, usually louder than credit alone. Having 6 months to a year of living expenses in the bank (including mortgage payments) will make it more likely that a lender will finance your mortgage. In addition, save up for a down payment. The higher down payment you can make on a property, the more likely you will be to get a loan, even with bad credit.

Finding a Arizona Mortgage Broker who is The Real Deal

Once you are ready to start the process of purchasing a home, it is important to find an Arizona mortgage broker who specializes in Arizona home loans for bad credit. A broker is different than a bank in that he is not tied to one lending source. A bank lends its own money and only has the programs and interest rates that it is approved for. A broker, can shop lenders to help find a variety of programs and interest rates. A bank works to make money for itself while a broker truly works to find the best deal for the borrower.

When you are looking for a broker, it is important to make sure you find one who is honest, knowledgeable, and aggressive. You should ask about licensing and experience. Make sure that your broker has experience with bad credit home loans and can clearly explain several current programs to you. Your broker should also be able to explain loan terms to you, including any fees and what your bottom line monthly payment will be. If there are any extra fees in the payment each month like insurance, your broker should be able to tell you why you are paying it, how long you will be paying it for, and if it will vary from month to month. This is very important because knowing what to expect each month will help you make on time payments and avoid any surprises.

Finding the right Arizona Mortgage Broker 

can be the key to your home buying success.

Your Arizona mortgage broker should be there to fight for you. An aggressive Arizona mortgage broker can help convince a reluctant lender to take a second look at your mortgage application. Once your loan goes into underwriting, it may be automatically rejected by a computer program based on your credit score. Your mortgage broker can help convince the lender to look at your application manually and put more emphasis on the assets you have in the bank and your recent on time rent payments. Finding the right broker can help make your homeownership dreams come true and put you on the path towards rebuilding your credit. When you are ready to take the next steps, your first call should be to an Arizona mortgage broker. 

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027