Bad Credit Mortgage Arizona: Why Credit Matters

Credit does matter when it comes to lending. Similar to job history,credit proves to lending companies that you have experience in the art of borrowing. Credit history can demonstrate trust, responsibility and commitment in terms of the ability to pay back what you owe. There are many situations where you may need a loan. Especially when it comes to buying a house.

How to determine bad credit and why does it matter when it comes to purchasing a home?

According to FICO International and other popular credit bureaus, a bad credit score is any score below 640. Credit scores above 640 are considered fair, good or excellent. Once your score is above 640, the chance of being approved for a loan increases significantly.

How does your credit become poor? What activities occur that results in bad credit?

Late payments. If you are late on credit card payments, that likely will have a negative effect to your credit score. To aid, this you may want to have your bills automatically deducted from a checking or savings account. This way you will not miss a payment and there will be no negative ding to your credit score. You can be confident that you will not miss a payment.

High debt. High debt can originate from any number of things. Debt is considered high when is over 1/3 of your monthly income. When you are living paycheck to paycheck, it is hard to keep track of your credit. Your income must be high enough that you are not worried about debt payments. Furthermore you have enough income that you can comfortably afford living expenses despite the inclusion of debt.

Defaulted on previous loans. If you have defaulted on loans in the past, whether they were loans for a car, healthcare or other situation.

Business failures. It is common knowledge that most businesses fail within the first couple of years. If you have ever owned a small business, than you may likely have experience in ventures that have failed. Owning a business can be stressful and before you realize it, you have spent most of your savings keeping it going.

Having a low credit score can hinder your ability to qualify for a traditional loan. This includes any vehicle, business or property loan. As we discussed from the beginning, credit history is similar to work history. It is a proven way that lenders, like employers, can take a background look at your ability to control debt responsibly. Your credit report (i.e. work resume) describes how you manage debt accounts and whether you have made payments on time. Of course, just like a resume, a credit report does not take in effect the details of your ability to borrow. It also does not account for simple mishaps and unfortunate tragedies that may have affected your credit. 

The situations explained above are such examples of unfortunate events. Many of these situations are at times not your fault and can come to as a surprise to you. Fortunately, good credit is not the end all, be all in securing a home loan.

 Common Misconceptions of Subprime mortgage Arizona

Subprime mortgages can be very useful for people that are looking to buy a house. Without this type of mortgage finding a loan may be difficult if you are struggling with any kind of financial difficulties. Many of these financial situations are out of people’s control and unfortunately this leads to a failure to qualify for large loans, especially mortgages. Knowing this fact, it is nice to know that there are other options available like subprime lending.

Despite the obvious upsides of Subprime mortgage Arizona there are negative connotations with these types of loan. In this article we will discuss and debunk the most common misconceptions about subprime lending. Consequently we will also examine the reasons why sub prime loans are actually helpful to buyers.

Why are Subprime mortgage Arizona cast in a bad light?

1.       Subprime loans are only lent to those that can’t afford them

This is simply not true. There are many different types of lenders along with various kinds of financial backgrounds. A lot of these situations weren't simply due to the lack of a person’s income. Unfortunate situations can occur which are not under the person’s control. Situations like employment status, defaulting on a high loan or previous mortgage; even such events like natural disasters. These situations often have nothing to do with whether buyers can afford to pay off a loan. Homebuyers may likely have the funds to carry a mortgage but simply had a past that disqualified them for a bank-sponsored home loan.

2.       All sub prime mortgage borrowers have bad credit

As mentioned above, there are many different types of loan borrowers. These borrowers can have many different financial backgrounds and be in different situations. Not all sub prime lending is the cause of bad credit and vice versa. Bad credit can also be the result of past hapless circumstances. Besides bad credit, home buyers likely will have a limited credit history. A limited credit history does not mean the individual has bad credit, but rather they do not have enough proof  (or “experience) in the act of repaying a loan. This gives banks a false impression that limited credit individuals are not financially capable to hold down a mortgage. People with limited credit history could be just out of college or school. They could also be people who do not carry a lot of credit cards or simply new to credit.

3.       Sub prime lending is the result of housing foreclosures and negative property values

Subprime mortgages are not the direct cause of foreclosures or loss of property nor are they the cause for negative property values. There are many other reasons for foreclosures to happen and it is not the result of using sub prime loans to secure a home.

How are Subprime mortgage Arizona are helpful to borrowers?

1.       Gives buyers a fair chance to own a home despite unfortunate circumstances

Despite past unsavory situations like loss of unemployment, sickness, or defaulting on a large loan, it will limit a buyer’s chance of obtaining a traditional home loan. Fortunately subprime mortgages exist to help out people that are able to make payments on a mortgage but may not qualify for a typical loan.

2.       Limited credit history

As mentioned earlier, limited credit history means that you don’t have enough proof or “experience” with borrowing credit. You may be on your first credit card that is still rather new or you may never have touched credit before. Either way, to a typical financial institution, you are a high-risk borrower. The only way to alleviate this situation is to wait until your credit history matures…or you can simply consider applying for a sub prime mortgage Arizona.

3.       Self-employed or other alternative income situations

Banks prefer borrowers with a guaranteed paycheck from an employer. This is reasonable to assume but it guarantees the lender that the borrower will have money coming in every few weeks. Unfortunately if you do not have a 9-5 job with an expected paycheck, it is more difficult to get approved for a loan. Individuals that are self-employed, rely on investments or other income situations need to seek alternative sources of borrowing. 

4.       No hassle with the banks

Why get frustrated with standard banking institutions, when there are other types of lending available? Instead of bank loans, other borrowers like yourself, have chosen to deal with private lenders. Private lending offices are often more flexible and sensitive to alternative financial situations when it comes to borrowing.

At Level4Funding we can help you get approved for a Subprime mortgage Arizona. Speak with one of our friendly advisors 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

Sub Prime Mortgages Arizona: Using an Adjustable Rate Mortgage to your Advantage

In recent years, subprime mortgages Arizona have earned a bad reputation. However, they can be a good option for borrowers to save on interest and insurance costs.

A sub prime mortgage is a loan given to a borrower who is considered to be a higher risk due to a poor credit score. Typically a subprime borrower has a credit score of less than 640, but this does vary. Since the lender is assuming a higher risk, the interest rate is also generally higher. Critics of subprime lending argue that it charges unfair interest rates and further burdens individuals with low incomes and high amounts of debt. However, for many individuals, sub prime mortgages Arizona are the only way they can qualify for a home loan.

The most common type of a sub prime mortgage is an adjustable rate mortgage or ARM. An ARM starts off at a low interest rate, usually lower than the prime rate around 2-3 percent. After a period of time from 1 to 5 years, the rate then adjusts to a much higher rate anywhere from 5 to 10 percent, depending on market conditions. This will cause your payment to go up rapidly. ARMs got a bad reputation during the housing crisis of the mid 2000s and were accused of being a way for banks to loan money to and take advantage of subprime borrowers. Many people lost their home due to the inability to make the new, higher payments after the rate adjusted.

Adjustable rate mortgages have been attacked by both talk news show hosts and some financial advisors who claim this type of loan is single handedly responsible for the foreclosure crisis and subsequent economic recession. This however, is too simplistic of a picture and throws the baby out with the bathwater, so to speak. While there are risks to sub prime mortgages Arizona, there are also benefits to ARMs that can be taken advantage of by both sub prime and high credit borrowers.

Benefits of an Adjustable Rate Mortgage

For many people, a traditional mortgage actually costs them money and simply does not make sense. Most people do not live in a home for 30 years, in fact the average time frame is 8 to 10 years. Even if they stay for longer, most people end up refinancing their mortgage at least once and some people refinance every 2 to 3 years. This ends up costing a significant amount in interest because in traditional home loans, you pay the majority of you interest during the first half of the loan term. Also, traditional 30 year loans charge a higher interest rate as a type of insurance for the lender. The lender assumes you will take 30 years to pay off the debt. 30 years is a long time and there is a chance that something could happen that would cause you to default. The lender charges you a higher interest rate to earn more money to keep as a type of insurance against default. The terms on an adjustable rate are only about 1 to 5 years so they can offer a lower interest rate since the term is shorter and less risky for the lender. An adjustable rate mortgage has a much lower interest rate than a traditional mortgage which can save you thousands of dollars over the loan term.

Although the rate of ARMs does adjust with time, you can always refinance to either a lower fixed rate mortgage or even another adjustable rate mortgage. Taking advantage of the lower interest rates of an ARM could save you thousands on mortgage interest, giving you more money to pay off the balance of your loan. As a result, you can pay off your home sooner and pay significantly less interest.

The most important piece of advice regarding ARMs, is to never overextend yourself. Many people bought homes that were otherwise out of their budget by taking advantage of the low interest payments offered by an ARM. Once the rate reset, they were unable to afford the home and could not refinance to a fixed rate mortgage because the home was out of their budget. Make sure that you budget for payments with an increased interest rate and buy a home that you can actually afford.

                               

Talk to a mortgage broker to determine if an adjustable rate mortgage makes sense for you.

Although there are many benefits to an ARM, there are also risks. A mortgage broker can help you navigate the ins and outs of ARMs and other sub prime mortgages Arizona. Make sure you know all of your options to help save money and make smart mortgage decisions.

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 Best Kept Secrets

            We don’t all have the perfect credit score to qualify for a loan to purchase a home. However, with bad credit loans Arizona residents can’t own the home of their dreams.

What’s part of your ten year plan? No doubt, being able to finally call a home yours in every sense is one of your top goals.  In fact, you've probably already set out in your mind how you’re going to design the master bedroom, or maybe you can envision a big screen television in your man cave. What’s holding you back? Bad credit doesn't have to deter you from making these things possible.

So what are your options? When mortgage lenders review the credit history of a borrower, they tend to look at three things on a credit line; the payment history, how much is owed and the age of the credit line. Late payments, frequently opening and closing accounts in addition to running up credit limits can have a negative impact on a the credit score. When attempting to get an home loan with bad credit you should start by looking for ways clean up your credit report. 

Tips For Cleaning Up Credit Report

Before applying for a mortgage with poor credit it’s important to do all you can to make improvement on your credit. This can be do by:

-          Removing old paid off debts from your credit report. This can be done by disputing claims with the debt buyer or Credit Bureau.

-          It’s common to find errors on your credit reports why is why you should thoroughly search all three of your credit reports for errors before applying for a bad credit  home loan, Arizona has many financial experts that can assist in this process.

-          Trying to pay off as many debts as possible. Make payment arrangements. Also, avoid accruing more debt by applying for credit cards and failing to pay current balances.

Bad Credit Home Loan Options

After cleaning up your credit report as best as you can, you should let prospective lenders know upfront that what kind of state your credit is in. This saves time by preventing the lender from searching into loans that aren't best for your current situation and they’ll be able to let you know quickly whether you will be able to secure a loan with their institution or not.

Depending upon how low your credit score is, you may be able to secure a home loan through a bank. However, you can expect to pay higher interest rates and you may even be required to put down a substantial down payment on the house you’re interested in purchasing. In addition  bad credit home loans Arizona has in place for residents include; sub prime mortgages.

A sub prime mortgage is a special type of mortgage option that is usually offered to people with low credit scores.  Since a borrower with a poor credit history is viewed as more of an higher risk than  the average, banks and other financial institutions charge higher interest at a rate that is drastically different from a conventional mortgage. 

Usually, borrowers with a credit score below 600 can qualify for a subprime mortgage.  Also, borrowers who've filed for bankruptcy within the last few years or have an history of late bill payments are eligible for this type of mortgage. How much of an interest increase can you expect to pay on a sub-prime mortgage?

There is no set general interest rate that lenders charge. However, a subprime mortgage payment is determined by important factor such as:

-          The size of the down payment on the home

-          The individual’s credit score

-          How many delinquencies are stated on the individual’s credit report

-          The type of delinquencies stated on the credit report

Bad Credit Home Loans From A Credit Union

When applying for a bad credit home loan, Arizona residents  have the option of borrowing from a local credit union. Credit unions are nonprofit, community ran financial organizations that provide credit and other financial services to members. If you have a poor credit history,securing a loan through a credit union could be the right move for you. Credit unions are known for their low interest rates and their great customer service. Most credit unions  by law can only charge up to 3 % interest rates or no more than 42% annually.

Credit unions have to protect the interests of all members, so before a loan is approved, the agent will have to make sure that you’re able to make payments on the loan by assessing your current financial state. This means that they’ll want to see how much income you are bringing in on a monthly or yearly basis and they may even want to see how much you have been able to save.

Yes, purchasing a home with bad credit is possible.  Finding the right loaning option will require in-depth research.

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 

Arizona Real Estate: Obtaining a Subprime Mortgage Arizona

A subprime mortgage Arizona allows individuals with less than stellar credit to purchase real estate in the Grand Canyon State. Knowing the types of mortgages available will help you choose the right mortgage product and save you money.

With great weather, a stable economy, and a real estate market with great deals, it is no wonder that so many people want to move to Arizona. With some parts of the state getting over 300 days of sunshine each year and skiing in the northern part of the state, it is the perfect place for sun worshippers and snow bunnies alike. If you find yourself dreaming of moving to Arizona, but have bad credit, you will want to start researching subprime mortgage Arizona to learn about the different types of mortgages available in the state for borrowers who do not have perfect credit. If you cannot qualify for a traditional mortgage due to a low credit score, a subprime mortgage might be a good option.

A subprime mortgage is a loan given to a borrower who is considered to be a higher risk due to a poor credit score. Typically a subprime borrower has a credit score of less than 640, but this does vary. Since the lender is assuming a higher risk, the interest rate is also generally higher. Critics of subprime lending argue that it charges unfair interest rates and further burdens individuals with low incomes and high amounts of debt. However, for many individuals, a subprime mortgage, Arizona is the only way they can qualify for a home loan.

Although subprime mortgages generally charger higher interest rates, for almost 42.5 million Americans, it is the only home loan they can qualify for due to a low credit score. If you find yourself having trouble obtaining a home loan in Arizona based on your credit, do your research on sub prime mortgage Arizona to determine the type of loan programs you may be able to qualify for. Knowing the different types of subprime mortgages can help you select the right product for you and your family.

Types of Subprime Mortgages

One type of mortgage available to subprime borrowers is what is known as an adjustable rate mortgage or ARM. An ARM starts off at a low interest rate, usually lower than the prime rate around 2-3 percent. After a period of time from 1 to 5 years, the rate then adjusts to a much higher rate anywhere from 10 to 20 percent, depending on market conditions. This will cause your payment to go up rapidly. ARMs got a bad reputation during the housing crisis of the mid 2000s and were accused of being a way for banks to loan money to and take advantage of sub prime borrowers. Many people lost their home due to the inability to make the new, higher payments after the rate adjusted. An ARM can be a good option if you are in the process of rebuilding your credit and will be able to refinance to a traditional loan before your rate adjusts. It is also a good option if you are buying a short term home to either fix and flip, or you plan on moving within the low rate period.

Another program that is available to low credit borrowers is an FHA loan. This type of loan is backed by the federal government and offers low interest rates and low down payment options. The loan is insured by the government so the borrower will end up paying what is called primary mortgage insurance or PMI payments. PMI payments can range from anywhere between 80 and a few hundred dollars so it does increase your monthly mortgage payment. You will make these payments until you have paid off 20% of your home loan.

A third, less common type of subprime loan is a hard money loan. A hard money loan is offered by a group of investors, rather than a bank. It is a short term loan that is designed primarily for fix and flip houses. Since investors are offering the loan, not a bank, they are more likely to give loans to borrowers with low credit, providing they have a sound real estate investment. Hard money loans are usually short term loans and last for a couple years.

Deciding on the right loan product is essential to making your sub prime mortgage borrowing experience positive.

Talk with a mortgage broker to further discuss your loan options. You may also qualify for certain federal programs that offer down payment assistance or cash back at closing. Your credit score does not have to determine your home loan status. Stop letting a number define you and call a broker in Arizona 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

Sub Prime Mortgage Arizona and Your Debt-to-Income Ratio

Before you purchase a home or any other large ticket item, you should look at your current finances. Do you already have a loan that you are paying off? If you do, you may already have significant debt, which can affect your ability to take on an additional loan.

Additional debt may be debt from credit cards, car loans and even student loans. All this additional debt can wrack up the amount of payments you make every month. What about your current income? Is your annual salary enough to cover your bills and save enough for a house? If all of these questions pertain to your situation, you may likely have bad credit as well. Bad credit does not mean you should pass by on buying a home.

Learn to secure a Sub Prime Mortgage Arizona. What constitutes a high debt-to-income ratio and how can I lower it?

Debt to income ratio is something to constantly be aware of when you want to buy a house. An income needs to be high enough that it will cover all monthly expenses. If your income is not high enough for the month, then it may be more difficult to secure a loan. How banks look at it, is that if you are already paying 2/3 of your income each month to bills and general living expenses. Any more than that, then you wouldn't have enough money for a roof over your head.

Therefore is best as a general rule, income must be 3 times the amount that you would pay for a monthly payment on a home. It may not be fair to an individual if they are able to live comfortably if there living costs are higher than 1/3 of their monthly salary, but that’s what lending institutions generally use to qualify others for loans.

It is also in your best interest to put together a budget before you decide to purchase a particular home. Take note of your average monthly salary and decide if the house you are purchasing is feasible. Depending on the amount of savings you have in your bank account, you may be able to buy your favorite home despite having debt.

Money you have available in savings may also lower your debt-to-income ratio. If you have significant savings that can be put towards a down payment, then you would not have to borrow a significantly high loan. It is easier to qualify for a smaller loan if your debt is not outrageous and your income is satisfactory. However not everyone has enough in savings to cover a down payment on the house they want. If that is the case, then it is advisable to look at other options when you have a high debt-to-income ratio.

Do you need a low debt-to-income ratio to secure a Sub Prime Mortgage in Arizona?

The simple answer is no.  If you cannot alleviate your debt or your debt-to-income ratio is less than stellar, there are still options available.

A sub prime mortgage is otherwise known as a bad credit loan. If you have bad credit due to having a high debt-to-income ratio, then you may consider a sub prime mortgage loan. You can apply for a specialized loan for bad credit situations. A specialized loan for bad credit is also commonly referred to as a sub prime mortgage. You do however need to make sure you qualify for a sub prime mortgage. A subprime mortgage in Arizona is easy to qualify for however, the only way to know for sure if you qualify for a specialized loan such as a sub prime mortgage is to speak with a professional lender.

The specialists at Level 4 Funding will help determine your credit situation and point you toward loan options that are 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

Get Approved for a Bad Credit Mortgage Arizona Despite Your Financial Situation

We all know that paying your loans on time is essential if you want to keep a good credit score, as

this is the only way you get another loan or even a mortgage. Credit history is essential when you apply for a mortgage, and this is why you need to ensure that you have a good score. A bad credit will most likely prevent you from getting a new loan since the lenders will fear that you cannot pay.

However you don’t have to worry that much because you can obtain a Bad Credit Mortgage Arizona even if you have a bad credit score, or if your credit history is far from perfect. There are a few ways you can make that happen, and in order to achieve such benefits you need to make sure you have enough cash in reserve. It is best to have enough cash because of a larger down payment that may be required, when applying for a loan with bad credit. Interest rates for loans with bad credit will also have different interest rates unlike traditional loans. However even with these differences, applying for a specialized loan is generally a lot easier and less of a hassle to get approved.

Applying for a bank-approved home loan with bad credit

Before you opt for a standard mortgage loan you should ensure that you check credit reports, as this will help you determine the current situation. Here you can also see if there are inconsistencies or errors, and if that is the case, then you might want to contact the credit company in order to solve the problem.

As a person with bad credit, you do need to expect things such as paying more interest, as banks or other lending institution will consider you a viable person to work with only if they charge you more than usual. In addition, you also do need to show that you have gotten a good job. This shows the bank that you have enough income that will cover all mortgage expenses.

Before you decide to get approved for a typical mortgage loan from a bank, you should try and eliminate all the other debts that you currently have. There’s no way you can receive a standard mortgage if you are still in debt with numerous financial institutions, but if you pay all your debts you do have the chance of getting such a loan. Additionally, if you make a larger down payment, you get a higher chance of having your application for a loan accepted, which is great to say the least! However this is exactly true whenever you apply for a Bad Credit Mortgage Arizona.

If you have a bad credit situation, then within your application you should also try to write down the explanations that bring you all the negative items in front. Tell why that happened and explain the situation, and make sure to say that this particular problem won’t appear again.

What to do if are still not approved for a bank-approved loan due tobad credit

If you are still not able to receive a mortgage despite the advice above, there are other alternatives available that you should consider.

For example there are Bad Credit Mortgage Arizona government programs so you might want to check them out, as they come with a flexible credit requirement that might prove to be helpful. You can also try and look for a cosigner, as this will increase the chances when it comes to getting a much-needed Bad Credit Mortgage Arizona.

The best suggestion however would be to talk to a professional. There are many professionals in the mortgage industry who are more than happy to assist you. At Level 4 Funding we can find the loan unique to your financial situation.

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