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Bad Credit Home Loans Arizona: How to Qualify for a Home Loan with Credit that Isn’t Perfect

There are a variety of circumstances that can lead to a low credit score. Learn how you can get a bad credit home loans Arizona and qualify for a mortgage, even if your credit is poor.

Many Americans who have bad credit report feeling alone, miserable, and almost hopeless. There are many factors and unforeseen circumstances 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 Inc. show that one quarter of Americans 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 42.5 million Americans with a low credit score, you probably assume that homeownership is beyond your reach. However, with new bad credit home loans Arizona 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. A broker has more flexibility in terms of types of loans that can be offered so you are more likely to qualify via a broker than a bank.

Types of Bad Credit Mortgages for Arizona

Once you have decided to look for a home loan, you need to do your research. There are a variety of home loan programs available to people with bad credit but they all have different features. Analyzing the risks and benefits will help you choose the right program for you. An Arizona mortgage broker can be a valuable resource in helping you learn about all the loans that may be available to you based on your credit score and current income.

One type of loan is an adjustable rate mortgage or ARM. An ARM is offered to subprime borrowers who would not qualify for a traditional loan. It offers a low interest rate at first but then resets to a high interest rate after a specified period, usually 1 to 5 years. Once the rate adjusts your mortgage payment will increase due to the higher interest rate. This can be a good option if you only plan on owning the property short term or if you know you will be able to qualify to refinance your loan at the end of your low rate period. You will also want to make sure that you have the home accurately appraised before purchasing so that it retains its value if you go to sell or refinance.

A second option that is available for people with bad credit is a type of FHA loan. An FHA loan is backed by the government and will allow you to borrow about 96.5% of the value of the home you are purchasing. In addition, the government backing means that you will be more likely to qualify, even with less than stellar credit. You will pay monthly insurance on your loan. In addition to you principle and interest payments, you will also pay a PMI insurance payment. This will increase the amount of your monthly mortgage payments until you pay off 20% of the loan amount. You can also couple FHA loans with different federal programs that offer down payment assistance or cash back at closing like Home in 5. These programs are constantly evolving and changing, so make sure to talk with a mortgage broker about what you may qualify for. You can qualify for an FHA loan with a credit score as low as 500, making them an attractive option for bad credit home loans Arizona residents use.

Make sure to know your options for home loans with bad credit.

A mortgage broker is key for many borrowers looking to secure a home loan with bad credit. A broker will work for you and help convince lenders that you are a risk worth taking. Finding a mortgage broker that specializes in bad credit home loans Arizona will ensure that you are receiving all the options to make owning a home a reality.