Real Estate Investing with Bad Credit Home Loans Arizona

Many individuals with bad credit scores believe that real estate investment is beyond their reach. However, with certain types of Arizona bad credit home loans , they can take advantage of investing in profitable Arizona real estate.

Nearly one fourth of all Americans with active credit accounts have bad credit. As a result, they are labeled as subprime borrowers for home loans, car loans, and credit cards. With a credit score below 640, they have a hard time qualifying for credit opportunities. If you find yourself in this position, you probably believe that homeownership and real estate investing are beyond your reach. This is not true. There are certain bad credit home loans Arizona programs that can allow you to purchase a home to live in or as an investment, even with bad credit.

The most common type of loan that allows bad credit borrowers to purchase a home is an adjustable rate mortgage (ARM). An adjustable rate mortgage offers a low interest rate at first for a specified period of time, usually 1 to 7 years. At the end of the term, the rate resets to a higher interest rate and the payments increase. The rates usually start out at less than 3% so it is easier for borrowers with bad credit or high debt to income ratios to qualify. The reset can climb above 5% so it is important to be strategic if you are using an ARM. An ARM makes sense for bad credit home loans Arizona if you are unable to qualify for a traditional loan but you are improving your credit. Making on time payments can help rebuild your credit so that you can qualify for a traditional loan when your rate resets. In addition, an ARM makes sense as a short term investment strategy if you plan on selling the home before the rate resets.

The most important thing to remember with an adjustable rate mortgage is to live within your means. You may qualify for a more expensive house than you could afford with a traditional mortgage. Once the rate resets you will be unable to refinance and might have to go the route of short sale or foreclosure. This hurts your credit score and is what gave Arizona bad credit mortgage loans  a bad reputation. Make sure that you do not overextend your budget and buy more home than you can reasonably afford.

Arizona Bad Credit Loans and Investing

While an adjustable rate mortgage can be an invaluable tool for home ownership, there is a lesser known investment strategy called hard money lending. Hard money lending a type of loan practice that is designed specifically for real estate investments. It is secured by a mortgage broker but 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 get a hard money loan, you need to work with a mortgage broker. 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.

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.

A hard money loan can be a valuable tool for bad credit mortgage loans Arizona investing and can help individuals with bad credit take advantage of the many benefits of investing in real estate.

Whether you are looking to purchase a home for your family or to make a real estate investment, there are many programs available regardless of your credit score.

An Arizona mortgage broker can help you decide what bad credit home loans Arizona program best fits your needs. A broker will review your financial situation and long term and short term goals to determine what mortgage product is best 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

Less than perfect Credit Has a Chance for a Hard Money Mortgage

If you are troubled by your less than perfect credit and you need some money for your property, then it might be best to start thinking about some non-traditional loan lenders. If you have heard of Arizona hard money loans before, but haven’t really looked into it, now is definitely the time.

Arizona hard money is unlike traditional loans in that these lenders will not ask you to divulge all your credit scores from the past six years. Instead, Arizona hard money loans are based on the property that you are dealing with. There isn’t half as much hassle or half as much paperwork. Everything is fast and easy. You can have your money so much sooner than what you would with a traditional bank loan.

If you feel like you might be confused between hard money lender Arizona and private money lender Arizona, don’t get flustered. While these terms are used quite often interchangeably, there is a slight difference.

Hard money lender Arizona is a group of people who wish to invest in your property with hard money Arizona. Meanwhile, private money lender Arizona is one person who wishes to invest in your property. You might know this person as they might be someone you’ve invested with before, but there’s a possibility they could just be a new investor interested in giving you your Arizona hard money.

Whichever route you choose, you will be delighted that you went the Arizona hard money way. This is the best way to get the money you need faster than any kind of bank loan and without half of the paper work or even the hassle. Say yes to Arizona hard money today. It could just be the best thing you ever did for you, your bank account, and your property. Don’t hesitate to look into Arizona hard money right this minute.

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

What is a Bad Credit and Subprime Mortgage Arizona

A subprime mortgage is one type of home loan that is available to Arizona borrowers with a low

FICO score. Learn all the details of subprime lending to determine the right loan for your unique credit situation.

Although a subprime mortgage can be a valuable tool in helping secure a home loan, many borrowers shy away from them due to recent negative press. Specifically, in Arizona, many politicians have gone as far as to label subprime mortgages as predatory lending practices. They claim that subprime loans are designed to charge high interest rates for people who cannot afford them.  Proponents of subprime mortgage Arizona programs claim that subprime loans allow individuals access into the home marker who would otherwise be shut out due to credit history.

Is a subprime loan a predatory tool used by banks, or is it a legitimate loan program to help bad credit borrowers? In order to answer these questions it is important to examine the actual numbers and statistics related to who is applying and qualifying for subprime and other bad credit loans.

One argument made by politicians against subprime mortgage Arizona is that minority borrower will be discriminated against and only offered high interest loans. A demographic study indicates that this is untrue. By analyzing zip codes and demographics, it was concluded that subprime mortgages are not more common in zip codes with a Hispanic population concentration. 

A second claim against subprime lending is that subprime loans are unfairly given out to borrowers who are young without a substantial credit history. Subprime mortgages are not given out to mostly young borrowers. In fact, the average age of a borrower for a subprime mortgage was between 35 and 55 years of age. This indicates that subprime mortgages are not being used to penalize borrowers with insufficient credit history due to age.

 Finally, another criticism is that subprime lending unfairly discriminates against low income borrowers. This is simply not true, most subprime borrowers in Arizona are above the median income line. Most subprime mortgages tend to be second mortgages that are purchased as investment properties. Subprime borrowers also own fewer low value homes than traditional mortgage holders.

Types of SubprimeLoans and Loans for Bad Credit

Many potential homeowners with low FICO scores find themselves denied by banks when they try to qualify for a mortgage. Nearly 1 in 4 Americans have a FICO score of less than 640 which is considered to be a subprime credit score. With a subprime score it can be difficult to qualify for a traditional home loan. However, there are other options available for a subprime mortgage Arizona. Certain loan types and programs can help borrowers with low credit scores qualify for a home loan.

One loan type that is available to borrowers with bad credit is a subprime mortgage Arizona. A subprime loan refers to a loan given to a borrower that represents a greater financial risk due to his/her credit score. A subprime loan is funded by a bank but does not have to meet the same underwriting guidelines as a prime loan. Subprime loans allow access to groups that would normally not have access to the credit market like people with low FICO scores. The most popular type of subprime loan is an adjustable rate mortgage or ARM. In an ARM, the initial interest rate is usually low but then adjusts after a period of time to above the prime rate. The low interest rate is usually locked in for anywhere from 2-5 years and can be as low as 2.5%. After the lock in period, the rate adjusts and can be as high as 10%. An ARM is a good option for borrowers who know they will have the credit to refinance to a traditional loan after the adjustable period or for borrowers who only intend to live in the home for a short period and sell the property before the rate adjusts.

A second type of loan available for subprime borrowers is a bad credit FHA loan. An FHA loan is backed by the Federal Housing Authority and will allow you to borrow about 96.5% of the value of the home you are purchasing. This means that you won’t have to come up with a large sum of money for a down payment. In addition, the government backing means that you will be more likely to qualify, even with less than stellar credit. This is because the government helps secure the loan for the bank in case of default. One important note is that you will pay monthly insurance on your loan. In additional to you principle and interest payments, you will also pay a PMI insurance payment. This is basically extra money you pay to help insure against default. PMI payments can range from $80 to over $200 each month, depending on the amount of the loan.

When you examine the numbers, it becomes apparent that a subprime mortgage is not used by lenders to make money from the lower class.

Rather, a subprime mortgage is a tool that can help individuals with bad credit access the home buying market. If your credit score is less than 640, don’t lose hope. Contact a mortgage broker to discuss your subprime and non-traditional loan options.

Level 4 Funding LLC

Dennis Dahlberg, Broker/RI/CEO

NMLS 1058389 AZMB 0923961

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444

www.Level4Funding.com