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

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

How to buy a house with bad credit in Arizona

How to buy a house with bad credit in Arizona: Analyzing the Risks and Benefits of a Sub-Prime Loan

Sub-prime lending and loan types that have been blamed for triggering the housing collapse in the mid-2000s. However, with more and more borrowers wondering how to buy a house with bad credit in Arizona, these loans are making a comeback. Many experts are wondering if tougher regulations can keep them safer.

Borrowers with bad credit or even credit blips are often turned down for home mortgages by traditional banks. Some bad credit borrowers have been thwarted for years by banks that have virtually shut down mortgage lending after the financial melt-down and housing crisis in the mid-2000s. A growing number of these individuals that are deemed “too risky” or credit impaired by traditional banks are asking questions like how to buy a house with bad credit in Arizona. With the right lending company, many are finding that this is not an impossible task.

New sub-prime loan products are hitting the market almost daily and helping to answer the question of how to buy a house with bad credit in Arizona. Unlike some of the more risky loans given out by banks in the early 2000s, the new sub-prime loans are more heavily regulated and require more documentation. They require down payments as well as documentation that the borrower can make monthly payments. In addition, some reformed sub-prime loans are backed by the government and may even have lower interest rates (at least initially) that traditional mortgage options.

There are several types of sub-prime loans including adjustable rate mortgages, hard money loans, FHA loans, and a number of other private loans offered by equity firms and private investors. If you are in the market for a sub-prime loan, it is important to know exactly what the terms of your loan are and to be smart about the type of loan that you choose.

Danger, Beware, Danger – Avoiding Risky Arizona Mortgage Lenders

If you are in the process of navigating the sub-prime mortgage market, make sure to find a mortgage broker or lending firm that has a good reputation. Foreign and domestic investors are pouring billions of dollars into the sub-prime lending market. While there are many, many reputable private equity firms, there are others that will take advantage of the desperation of a borrower with bad credit.

When you investigate a lending firm, make sure that they operate under a valid broker’s license and are qualified to offer the loan products they sell. This is especially important if you are working with a foreign investment firm or a private equity firm. When they are helping you figure out how to buy a house with bad credit in Arizona, the firm should discuss more than just the interest rate with you. You should also know what your loan is called, the exact terms of you loan, the interest rate, and your estimated monthly payments including interest, taxes, and insurance. You should also be asked for some proof of income to insure that you are able to make your monthly payments. If you have bad credit, you will most likely pay more for the loan in terms of interest, generally about 6 to 9 percent but the rate should not be near the usurious loans prior to 2008, when rates often exceeded 15%.

Once you are offered a loan product, you should sit down and really look at your monthly budget. Think about if you will be able to make the monthly payment. If the answer is yes, then you should also consider your long term goals as well as your credit history. If you have bad credit, it is important to think about if this will change. On time mortgage payments are a great way to rebuild your credit and you may be able to refinance to a lower interest rate in the future. Also, consider if the home you are buying will be a short or long term investment and estimate and profit you may make, after the higher interest rate is taken into account. Your broker should be able to give you detailed fee sheets with different financial, down-payment, and interest rate options so you can see all the numbers in black and white.

Stop wondering how to buy a house with bad credit in 

Arizona and start making your dreams come true.

Although it is important to make sure you know what you are getting into with a bad credit home loan, it should not scare you away from purchasing a home. Many Arizona Home Loan lenders and equity firms are there to lend a helping hand to purchase your dream home. Making sure you are aware of all the financial ramifications will help you make the right decision for you and your family. Contact an Arizona mortgage broker or equity firm to get started today. Their licensed mortgage professionals can help you analyze the risks and benefits of sub-prime loans and choose the right product for your home purchase.

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 with Bad Credit

Arizona Home Loans with Bad Credit: Using Arizona Mortgage Brokers and Investment Companies to Help Make your Dreams Come True

If you have bad credit, it may seem impossible to qualify for Arizona home loans with bad credit. However, there are brokers and investment companies that are there when you need them and can help you find a loan type to purchase your dream home.

Having bad credit can make you feel isolated and alone. According to many surveys Americans with bad credit suffer from depression and feelings of hopelessness. These feelings are usually made worse by way you are treated by financial institutions if you have bad credit. You will probably be turned down for credit cards, auto loans, and may not even be able to get certain jobs.  If you are looking for Arizona home loans with bad credit you will most likely be denied by traditional banks. It may seem like owning a home is impossible. However, if you find the right type of lender, finding a home loan, even with bad credit is possible.

Types of Lenders That Are Here to Help When You Have Rotten Credit

One type of lender is a bank. A bank is the most common type of lending institution and usually what borrowers think of first. Banks offer many different loan types including FHA loans, adjustable rate mortgages, and traditional 15 and 30 year fixed mortgages. The bank sets its interest rates based on market conditions, government regulations, and other factors. There is one interest rate to choose from, the one offered by the bank you are obtaining the loan from. The bank will not shop around to find better interest rates, what they offer is what you get. Often this can mean that you end up paying a higher interest rate than if you used a different type of lender. A second downfall of bank mortgage loan is that they are often not a good option for bad credit borrowers. Banks tend to shy away from any investment they deem too “risky” and will often define borrowers in terms of their FICO score, without assessing other factors. This makes them a not an ideal institution in terms of find Arizona home loans with bad credit. 

Another type of lender a borrower can look to for a home loan is a mortgage broker. A mortgage broker in an individual or company that specializes in home loans. Like a bank, you can get multiple loan types but, a mortgage broker is not locked into one interest rate or one lender. The broker or broker company will basically shop loans for the borrower to find the best interest rate and loan terms based on current market conditions. In addition, a mortgage broker can find loans that banks may not be able to give because the borrower or loan type is too “risky” for a traditional lending institution. This makes a mortgage broker a better choice for borrowers with bad credit.

A final type of lender that most borrowers don’t even know exists is a private lender firm. These private investment firms are run by a licensed broker who is up to date on mortgage and real estate laws, programs, and terms. The loans are funded by private investors rather than a bank. As a group of private investors, these types of lenders are more likely to look at the merit of the property as well as the potential to make money as compared to exclusively the credit score of the borrower. This makes them a good option for borrowers with bad credit. In addition, private investment firms usually offer different types of loans than you can find at a bank or even with a mortgage broker. However, it is important to make sure that you are working with a legitimate financial institution that is operated under a broker license. You can find private lending firms through a mortgage broker or other investment professional.

See the difference the right lender makes, call a broker today.

A broker can help you find the right loan and right investment company for your financial situation. Even if you have bad credit, there is a lender and a loan that is right for you. With the majority of Americans having a “fair” or “poor” credit rating, you are in good company. Talk with a financial professional about Arizona home loan with bad credit. Don’t put your dreams on hold any longer.

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

Types of Arizona home loans with bad credit: Hard Money Lending

There are a variety of circumstances that can lead to a low credit score. Learn how you can get Arizona home loans with bad credit and qualify for a home loan, even if your credit is less than perfect. Specifically, learn more about hard money loans and how they can used to help individuals with bad credit take advantage of the lucrative world of real estate investing.

Many Americans who have bad credit report feeling alone, miserable, and almost hopeless. There is a false picture of a person with bad credit that paints him as irresponsible, reckless, and even as a thief. This could not be further from the truth. There are a variety of factors that can lead to a lower credit score. Job loss, divorce, a sudden change in income, or even an old credit card you forgot about can cause your credit score to suffer. Recent statistics released from FICO indicate that one quarter of Americans with active credit accounts have a FICO score of less than 600. This is considered a low credit score and if you have a low score, you can have trouble getting credit cards, car loans, and even store credit accounts.

If you are one of the over 40 million Americans with a low credit score, you probably assume that homeownership is beyond your reach. However, with new Arizona home loans with bad credit programs as well as federal programs, borrowers can qualify with low FICO scores.

As with any mortgage it is important to analyze the risks and benefits of a low credit mortgage. Once you have decided to stop letting your FICO score hold you back, it is important to know your options. Most likely you will not qualify for a bad credit mortgage through a bank, so it is important to find a reputable mortgage broker or investor group. A broker or investor has more flexibility in terms of types of loans that can be offered so you are more likely to qualify for a home loan. In addition, there are many private broker firms that use private investor funds. This makes it more likely that you can qualify based on the merit of your investment, as opposed to your FICO score.

There are many types of bad credit mortgages that are offered in Arizona. Many people know about adjustable rate mortgages and FHA loans that are designed for long term homeownership. However, there is a less well known Arizona home loan with bad credit loan type called a hard money loan. Rather than the goal being long term homeownership, a hard money loan is designed to be an investment strategy to help borrowers with bad credit make smart real estate investments and turn large profits.

What is a Hard MoneyLoan?

For many people with bad credit, they assume that real estate investing is out of their reach because a bank will not lend them money for a mortgage. A hard money loan is a type of loan that is designed specifically for real estate investments. It is backed by an investor or group of investors instead of a bank. The loan is for a short period of time, usually a few months to about 4 years. The goal of the loan is a true investment, for everyone involved to make money.

In order to secure a hard money loan, you need to work with a mortgage broker or private investment firm. You would determine a property that you wish to purchase that is a sound investment. Typically these are fix and flip type houses that can build equity quickly. Once you have a property in mind, your broker will connect with a hard money investor or investment team. The investors will examine the merit of the property and the money making potential. They will use this information to determine whether or not they want to invest their capital. With many hard money lending companies, you can get fast approval. Some, like Level 4 Funding offer approval in as little as 30 minutes so you don’t waste your time.

Since a hard money loan is backed by investors, they are more likely to give loans to individuals with bad credit. Instead of only looking at numbers, the investors look at the potential for the property to make money and don’t focus solely on the credit score of the borrower. Once the borrower has renovated the property and sells it, the investors make back their money plus a certain amount of interest. The borrower also makes money on the investment so it is a win/win situation. One thing to be aware of is that hard money loans are short term loans. Usually the loan is only for about 24 months but some companies will offer longer terms. In addition, you will pay a higher interest rate because you represent a greater risk to the investors.

 If a hard money loan sounds like a good investment for you, talk with a mortgage broker.

A hard money loan is a special type of Arizona home loan with bad credit in that it allows individuals with bad credit to make real estate investments. These investments can have high returns and have great money making potential. If you have bad credit but want to invest in real estate, a hard money loan might be a good option for you. Talk with a mortgage broker today to help you secure your loan and begin your real estate investing journey. 

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