Setabay Private Hard Money Lender: Arizona home Loans with bad credit

Saturday, February 28, 2015

Adjustable Rate Mortgages: Arizona Home Loans with Bad Credit

If you have a credit score of less than 640, you probably have trouble qualifying for a home in Arizona. If you find this position you want to look into programs that will allow you to qualify for Arizona home Loans with bad credit.

A bad credit score in terms of obtaining a home loan is classified to be at or below about 640, but this has varied with time and location. However, according to national credit bureaus, the average American’s credit score is around 678, meaning that most people don’t have perfect credit. If you have bad credit, there are a number of events that could have gotten you there that are beyond your control. Divorce, job loss, inability to make mortgage payments due to an over-inflated housing market, and the recent recession are all factors that have negatively impacted may people’s credit scores.

If you are looking for Arizona home Loans with bad credit you are not alone.

Approximately 42 million Americans have a sub-prime credit score. A home loan can be a good way to rebuild your credit as long as you plan on making on time payments. One program that is available to sub-prime borrowers seeking an Arizona home Loans with bad credit is an adjustable rate mortgage or ARM.

An ARM is a mortgage that is different than a 30 year mortgage in that it is for a shorter period of time, anywhere from 1 to 7 years. The most commonly offered types of ARMs are 3 and 5 year ARMs. During that time period you have a low interest rate, usually below the prime rate. This low rate means lower payments. The lower monthly payments helps many individuals and families qualify for an ARM who would not be able to qualify for the higher payments of a traditional mortgage. After the initial period, the rate of an ARM adjusts or resets to a higher than prime rate. This will increase the monthly payment amount based on the interest rate you are being charged. Every ARM has certain maximums depending on the type of loan. There is a maximum amount you can be above the prime rate as well as a maximum number of times the loan can reset.

One of the major criticisms with adjustable rate mortgages has to do with what happens after the rate adjusts. Because the interest rate increases, the amount of your monthly payment will also increase. In the mid-2000s, the increase in payments combined with the decline in the housing market led to a large number of sub-prime foreclosures. This has led to many law makers and media outlets to criticize ARMs as being irresponsible lending practices. However, an ARM can be a good option if you are smart about how you use it.

An important thing to keep in mind with an adjustable rate mortgage and really for any Arizona home Loans with bad credit, is to not borrow more than you can afford. If you cannot afford the payment on a $200,000 mortgage at a 30 year rate, do not borrow that much using an ARM, unless you are planning to move long before your rate resets. In addition, make sure to make smart real estate choices. Before you purchase a home look at the area and the overall price history. Don’t buy unless you are relatively certain that the home will increase in value. Also keep in mind that federal regulations require a 10% down payment up-front. Make sure that you have this money available before you close on your ARM loan or you will not be able to close. If the 10% down payment is more than you have available in savings, you might want to consider and FHA adjustable rate hybrid option. This loan type offers many of the benefits of an ARM with a lower down payment and government insurance.

ARMs for Prime Borrowers

An adjustable rate mortgage is a great program for borrowers needing an Arizona home Loans with bad credit, but it is also a great option for prime borrowers in certain situations. An ARM allows you to take advantage of low monthly payments and can save you a significant amount in interest payments. If you are wanting to purchase a property and will be able to sell or refinance before the rate resets, an ARM can be good option even if you would qualify for a traditional mortgage. Many savvy borrowers take advantage of adjustable rate mortgages to make real estate investments and purchase fix and flip houses.

An adjustable rate mortgage can be a good option for sub-prime and prime borrowers alike.

Find a mortgage broker to fully discuss your home loan options and determine if an adjustable rate mortgage is a smart financial decision for you.

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

Monday, February 16, 2015

Arizona Home Loans with Bad Credit

Many families think that home ownership is beyond their reach because they can’t get Arizona home Loans with bad credit. However, this is simply not true as there are a variety of programs available to help borrowers with bad credit purchase a home in Arizona.

If you have been denied a home loan in the past due to bankruptcy, bad credit, or sub-prime credit, you may think that purchasing a home is out of your reach. Many borrowers don’t know that there are a variety of programs available to them, even if they have less than perfect credit. Don’t let bad credit hold you back from obtaining a new home for your family or as an investment. Learn about your options for purchase and talk with a mortgage broker.

One program that can help individuals looking for Arizona home Loans with bad credit qualify to purchase a home is an FHA loan. FHA stands for Federal Housing Administration and this entity gives out a type of government backed loan. Borrowers are only required to make a 3.5% down-payment so it can help keep some cash in your pocket. In addition, the loan is insured by the federal government so banks are more willing to lend to sub-prime borrowers. This insurance will cost you though. Be aware that if you take out an FHA loan, you will be required to pay make PMI payments. These can be anywhere from 80 to over 200 dollars a month depending on the amount of your loan. You will make them until the loan amount that you have is less than 80 percent of your purchase price. The PMI payments are a type of insurance you pay to help secure the investment in case of default.

Another loan type that is available for borrowers in the market for Arizona home Loans with bad credit is an adjustable rate mortgage or ARM. An adjustable rate mortgage is a short term mortgage with a term of anywhere from 1 to 7 years. During your initial term the interest rate on your mortgage is very low, usually below the prime rate. This makes your payment relatively low as well. The lower monthly payment allows borrowers with bad credit to qualify when they may not be able to for a traditional 30 year loan. After the initial term of you loan, the interest rate resets and your payment may be higher. This can be a good option for someone who is on the road to repairing his credit and will be able to refinance to a 30 year mortgage at the end of the adjustable rate term. One thing to keep in mind with an ARM is that they require a 10% down-payment. This helps ensure that the property value will not drop significantly below the loan amount.

A final type of program that a borrower in Arizona with bad credit might consider is a hard money loan. A hard money loan is designed as an investment strategy and isn’t a good option for owning a home you intend to live in long term. A hard money loan is backed by a group of investors, rather than a bank. The investors will look at your property purchase as well as renovation plans to determine if the loan is a good investment. If you have bad credit they are more likely than a bank to look past your credit score if you have a sound investment idea. Hard money loans are short term loans primarily designed to fix and flip a property for a profit.

The Truth about Bad Credit Mortgages

If you are looking for Arizona home Loans with bad credit you are not alone. Approximately 42 million Americans have a sub-prime credit score. Don’t let your bad credit keep you from owning a home when there are so many bad credit loan programs available to Arizona residents.

If you want to take control of your home ownership or real estate investment dreams, stop letting credit hold you back.

Call a licensed Arizona mortgage broker today. A broker can discuss your options regarding Arizona home Loans with bad credit and help you find the loan to best fit your needs. Stop waiting, call today!