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

Bad Credit Home Loans Arizona: How to Get a Home Loan

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

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 bad credit home loans Arizona 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 bad credit home loans Arizona 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 Arizona Bad Credit Home Loans

There are many rumors about bad credit and home loans. 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. Based on the prevalence of bad credit, many lenders are relaxing their loan requirements and it is possible to get a home loan with a score of less than 550, depending on other factors.

If you want to take control of your homeo wnership 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 bad credit home loans Arizona and help you find the loan to best fit your needs. Stop waiting, call 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

The Risks and Benefits of Adjustable Rate Mortgages

The Risks and Benefits of Adjustable Rate Mortgages for Borrowers Seeking Arizona Home Loans with Bad Credit

Adjustable rate mortgages can be an attractive option for borrowers who have bad credit and are looking for different Arizona home loans programs. Knowing the facts about adjustable rate mortgages can help you risk less and make an informed decision.

Adjustable rate mortgages or ARMs are a type of mortgage that is offered by many banks and lenders. An ARM has a fixed interest rate for anywhere from 1 to 7 years, depending on the specific terms of the loan. After the initial term, the interest rate adjusts and increases above the prime rate. This will increase the monthly payment amount because the interest you pay each month has increased. ARMs have gotten a bad reputation in recent years as being dangerous and even predatory. Adjustable rate mortgages were in the hot seat in 2008, largely being blamed for the housing and foreclosure crisis.

Although they have been shown in a less than flattering light, adjustable rate mortgages can still be a good option for individuals looking for Arizona home loans and are especially good for borrowers who may have bad credit. Knowing the ins and outs of adjustable rate mortgages can help make them less risky and protect your investment.

Ways to Risk Less with Adjustable Rate Mortgages

If you are thinking about an adjustable rate mortgage as an option to help you secure Arizona home loans, it is important that you know all the facts. An adjustable rate mortgage will offer you a low monthly payment at first. This led many borrowers to over extend themselves and buy more home than they can afford once they have a higher interest rate. An easy way to avoid this Arizona home loans mistake is to closely examine monthly payments before and after the interest rate reset. You should be able to find out a cap on how high the rate could potentially go and what your payment will be at that rate. If you can afford the payment at the lower interest rate but not the higher one, it is safer to find a less expensive home.

Another way to minimize risk with an adjustable rate mortgage is to work with trustworthy real estate professionals. If you decide to refinance your home before your rate resets, you will need the home to be worth as much or more than when you bought it. An appraiser can help you make sure that you a making a sound investment. Also, a good real estate agent can help you understand housing trends and steer you away from areas of town that may be likely to lose value over time.

A third way to minimize your foreclosure risk is to sell the home before the rate increases. This can be an effective way to make money by fixing and flipping a property for profit. An adjustable rate mortgage will save you money on interest while you are fixing up the property, making the cost of ownership less. Just keep in mind that it is important to be able to sell the property for a profit when you are done. Make sure the home you buy is a sound investment, in a desirable area of town, and the work that it needs is within your budget and skill level. It does no good to end up spending more fixing up a home than you will make when you sell it.

Find a mortgage broker to work for you and get started on the process of qualifying for an adjustable rate mortgage.

Whether you have bad credit and it is the best loan you can qualify for, or you want to save a couple bucks on interest, an adjustable rate mortgage can be a good investment strategy. An Arizona mortgage broker can help you navigate the ins and outs of an adjustable rate mortgage and go over any additional information including down payments, current interest rates, and projected monthly payments.

When you are choosing a mortgage broker, make sure they have expertise in a variety of Arizona home loans products, including adjustable rate mortgages. A broker can be your most valuable tool in qualifying for a home loan because he will fight for you to be approved. He can even get lenders to manually review your application if underwriting rejects it. Find a broker you can trust today to start your journey towards homeownership or real estate investing.

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

How To Buy A House With Bad Credit in Arizona: Find a Lender That is There When You Need Them

If you have a bad credit but are eager to buy your own home, you may be finding that traditional banks and loan types are standing in your way. However, many investors and mortgage brokers are here to lend a helping hand to turn your homeownership dreams into a reality by helping you figure out how to buy a house with bad credit in Arizona.

Bad credit can create a situation that feels almost hopeless. You will be judged by loan officers and potential employers before you even walk in the door. If you have rotten credit, chances are you have been denied a home loan, credit cards, car loans, and even jobs.  Many people and companies will stereotype you as being lazy or irresponsible based on your credit number. The truth is, bad credit can happen for a variety of reasons. Divorce, job loss, injury, or illness can cause your credit score to go down. In the current economy the average credit score is in the 600s, meaning that bad credit is more common than you may think. High fuel costs, increased taxes, inflation, and falling housing prices have put a financial strain on many Americans.

If you find yourself in the unfortunate situation of having bad credit, you may think that purchasing a home is impossible. However, there are many loans that you may be able to qualify for, even with rotten credit. If you find yourself wondering how to buy a house with bad credit in Arizona, there are a few things you need to know. First and foremost, it is possible to qualify for a home loan with bad credit. There are a number of programs and loan types geared towards sub-prime or bad credit borrowers. Secondly, there are specific benefits and risks associated with each type of loan. Knowing all the benefits as well as the risks can help you make an informed credit decisions

.

Arizona Home Loan Types that Benefit Bad Credit Borrowers

One type of loan that can benefit you if you have bad credit is an FHA loan. An FHA loan is a loan type that is insured by the federal government. In order to obtain an FHA loan, you need to work with an FHA accredited lender. The lender will approve you for the loan based on your income and credit score. Each month you will pay extra in the form of a monthly insurance premium or MIP. The MIP will vary based on your loan amount and the value to debt ratio of the property you purchase. The reason you pay this insurance premium is to insure you loan against default. If you default on the loan, the FHA will pay the bank back. This is why an FHA loan is an ideal loan type for borrowers wondering how to buya house with bad credit in Arizona. Since the loan is insured by the government, the bank is more likely to give a loan to a borrower that it views as being higher risk. In order to qualify for an FHA loan, you will need to have at least 3.5% of the purchase price to put down so make sure you save accordingly. Not having this could delay your loan.

Another type of loan that you will want to look into if you have bad credit 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. In order to qualify for an adjustable rate mortgage, you will need to have at least 10% of the purchase price to put towards a down payment. If you are buying a home for $200,000, this means that you will need at least $20,000 in savings.

Finally, in addition to ARMs and FHA loans offered by banks and mortgage brokers, there are a variety of private lenders that can help buyers navigate the Arizona housing market. Private equity firms and hedge funds offer home and property purchase loans for both home ownership as well as real estate investment purposes. Private loans will have terms that vary depending on the firm, but they are still overseen and regulated by the government. You may pay a higher interest rate, but you are also much more likely to obtain approval, even with bad credit. Since the firm is private, there is much more flexibility in terms of FICO scores as well as extenuating circumstances that may have created your bad credit.

To help figure out how to buy a house with bad credit in Arizona, 
contact an Arizona real estate agent.

A real estate agent should be able to help you connect with a number of banks, brokers, and private firms to help find the right lender for you. Owning a home can help rebuild your credit. Call a realtor today to help make your dreams come true.

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

Hard money comes easy as Wall Street funds home flippers

Hard money comes easy as Wall Street funds home flippers for Arizona Home Loans

Real estate buyers seeking Arizona Home Loans to renovate and flip U.S. houses are getting help from some of the world’s biggest investment firms.

Colony Capital Inc., Blackstone Group LP and Cerberus Capital Management are among the companies that have started making bridge loans to investors who buy homes to sell them quickly for a profit. Borrowing costs -- traditionally the highest in residential lending -- are tumbling as the firms compete for customers.

The foray represents a deepening bet on the housing market by Wall Street-backed companies, many of which have built rental-home empires during the past three years and started specialty-lending businesses to finance smaller investors. Big firms with deep pockets and access to cheap capital may have an edge over local private lenders that have dominated flipper financing.

 “It’s one of the few highly fragmented businesses left,” said Beth O’Brien, chief executive officer of Colony’s lending business, which started offering the loans last May. “If someone can do it nationally at scale, it’s cheaper and better for the borrower.”

Bridge loans, also known as hard-money or asset-based loans, give flippers cash for home purchases and construction with about a year to repay, and are backed by the real estate. They represent an opportunity of about $30 billion in origination annually, according to LendingHome, an online mortgage marketplace that makes short-term loans and sells them to investment firms such as Colony.

Blackstone, the world’s biggest alternative-asset manager, is seeking to make $1 billion of the loans a year, according to Nick Gould, executive chairman of the firm’s B2R Finance unit. B2R, started in 2013 to lend to landlords, earlier this year acquired Dwell Finance, which provides “fix and flip” funding.

Record Profits

Arizona Home flippers are benefiting from rising prices, limited new construction and a shortage of inventory on the market. While quick resales have decreased from the start of the housing market’s rebound, when investors snapped up discounted distressed homes, profits are getting bigger.

The average gross profit for completed flips in the first quarter was $72,450, up from $61,684 a year earlier and the highest in records dating to 2011, according to a report Thursday from RealtyTrac, a real estate data firm. Markets with the highest average gross return on investment included Baltimore, central Florida and Detroit.

Fix-and-flip investors have generally gotten funding from local private lenders as banks have shown reluctance to extend credit for speculative real estate deals. Borrowers are forced to pay high costs in exchange for the quick cash.

Falling Rates Private Hard Money

Since big investment firms have entered the industry, rates have already come down significantly and fees charged to borrowers, known as points, have decreased as well, according to Fred Lewis, founder of Dominion Group, a Baltimore-based real estate firm that has been lending to house flippers for about 14 years.

“Rates historically were much higher, typically 15 percent with three to five points,” Lewis said. “In the last few months we’ve seen deals being done at 10 percent and two points.”

The new lenders are focused on more experienced investors, many of whom have have established companies, rather than the amateurs that proliferated during the housing boom a decade ago. Today’s flippers are more sophisticated after the crash weeded out most of the weaker investors, Lewis said.

“These are ideal clients, with the potential to be repeat borrowers across a number of product lines,” said Randy Reiff, chief executive officer of Cerberus’s FirstKey Lending.

Resource Intensive

FirstKey started offering fix-and-flip loans about six months ago and is just beginning to expand the business. Interest rates generally range from 9 percent to 12 percent for 12-month terms. Borrowers often sell their homes and repay loans earlier, said Reiff, which means it takes a lot of effort to rapidly expand the business.

“It’s resource intensive, and it’s important to have an adequate infrastructure,” he said. “If the regional guys do $50 million of product a year, they could be a major player in their markets. For the larger institutions, that barely moves the needle.”

The hard-money market is getting crowded, which may lead companies to loosen their standards, said Mark Filler, CEO of Jordan Capital Finance, a lender acquired by credit investor Garrison Investment Group about six months ago. His business has more than 300 approved borrowers with credit lines.

“Everybody just jumped in,” said Filler. “The risk is people start to relax underwriting guidelines to chase loans. As this becomes more competitive, there will be more pressure to do that.”

Added Service

A regional company such as Dominion competes on service when it can’t offer rates as low as Colony or Dwell Finance, Lewis said.

“We’re closer to the ground so we can lend higher loan-to-value for Arizona Home Loans and lend it faster,” he said. “If someone calls on Monday, they can be preapproved and funded on Friday. Institutional guys can’t do that.”

Borrowers such as Alex Sifakis, president of Jacksonville, Florida-based JWB Real Estate Capital, are willing to pay more for greater leverage. His firm buys about 40 homes a month and sells half, keeping the rest for rentals.

Dominion gives JWB 90 percent of the home’s purchase price and 100 percent of rehab costs, he said. That compares with 85 percent of both purchases and renovation it gets from lines of credit with institutional lenders, including Genesis Capital, which comes at 9 percent interest rates and two points. Los Angeles-based Oaktree Capital Group LLC invested $100 million in Genesis in January 2014.

“It’s a great thing to have more and cheaper money in the space,” Sifakis said. “It will cause some of these guys charging 14 percent and 4 points to lose a lot of business.”

‘National Platform’

Blackstone’s B2R is focusing on more established borrowers like Sifakis, to whom they extend loans that look more like lines of credit that average $1 million and go to as high as $100 million, with assets cross-collateralized. Rates are as low as 8 percent and one point. The firm also built a technology platform to make the application process faster.

“This is a sizeable and timely opportunity to institutionalize and consolidate an asset class that’s always been a localized business,” B2R’s Gould said at a real estate conference in Miami last month. “There hasn’t been a national platform that has the capacity 

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