NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
23335 N 18th Drive Suite 120
Phoenix AZ 85027
Monday, February 9, 2015
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.
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.
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.
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
23335 N 18th Drive Suite 120
Phoenix AZ 85027
Thursday, January 29, 2015
Sub Prime Mortgages Arizona: Predatory Lending Practice or Sound Financial Strategy?
Subprime
mortgages in Arizona have been considered a predatory lending practice by many
law makers. The facts show otherwise as subprime mortgages Arizona have typically been used by investors as a money
making strategy, not by people who have been taken advantage of by banks.
A
subprime mortgage is a lending practice that can benefit borrowers with low
credit scores. Typically, subprime mortgages are given to borrowers with a less
than stellar credit history or to borrowers with other financial factors that
make them too much a liability for a traditional loan. Usually subprime
borrowers have a credit score of less than 640, which is considered a poor
score. Based on these factors, the borrowers would not qualify for a
traditional mortgage so banks give them a subprime loan with a higher than
average interest rate. Because subprime borrowers represent a higher risk for
the lender, most lenders charge a higher than prime interest rate.
The
most common type of subprime mortgages that are offered are adjustable rate
mortgages or ARMs. An adjustable rate mortgage initially offers a very low
interest rate, usually below the prime rate offered by a traditional loan. For
an informed investor who intends to fix and flip or only own a home for a short
period of time, an adjustable rate mortgage can be a great investment tool.
However, an ARM is somewhat misleading to uninformed borrowers as it initially
charges a lower interest rate. After the ARM period the rate adjusts to a
significantly higher rate and higher monthly payment. In addition, ARMs allowed
borrowers to purchase homes that were too expensive for them to afford with a
traditional mortgage, making it impossible for them to refinance to a fixed
rate. These types of mortgages were given out frequently by banks to
un-creditworthy buyers in 2005 and 2006. Once the loan reset to the higher
interest rate, many borrowers were unable to afford their new monthly payments
and defaulted on their home loans. ARM were largely responsible for the
increase of subprime mortgage foreclosure increases in the mid-2000s.
In response to the foreclosure crisis, may law makers want to eliminate sub prime mortgages Arizona entirely.
They cite these types of loans as being predatory lending practices as the
interest rates can reach as high as 9% when a traditional loan hovers around
4%. They also claim that these loans are disproportionately given to people who
make less than the median level of income and there is also fear that subprime
mortgages could hurt minorities or young people.
Facts about Subprime Lending in Arizona
There is somewhat unfounded concern among law makers that sub prime mortgages Arizona are
designed by banks to gain the most money from groups who have the least. The
foreclosures of the mid-2000s helped fuel this fire. Politicians make a variety of claims about the risks of
sub prime lending in Arizona, however, many of these claims are simply not
true.
The
first assertion by politicians looking to discredit subprime lending in Arizona
is that sub prime mortgages 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 sub prime lending is that it unfairly discriminates
against low income borrowers. This claim is categorically false. In fact, 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 tend to own fewer low value homes than
traditional mortgage holders.
Finally,
another criticism 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.
Since subprime mortgages often reset to higher interest
rates, they have unfortunately been lumped into the same category as title or
payday loans. Some politicians see them as predatory practices without having
all the facts. Sub prime mortgages Arizona are a tool that can be used for borrowers that would otherwise not
qualify for a mortgage. As long as the borrower is informed about the risks, a
sub prime mortgage can be an invaluable tool to help them purchase a home or
investment property. Contact a local mortgage broker to determine your options
and see if a subprime loan is a good option for you.
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel: (623) 582-4444 | Fax: (888) 279-6917
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
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
Using an Adjustable Rate Mortgage to your Advantage
In recent years, sub prime mortgages Arizona have earned a bad reputation. However, they can be a good
option for borrowers to save on interest and insurance costs.
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, 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.
Dennis Dahlberg
Broker/RI/CEO/MLO
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel: (623) 582-4444 | Fax: (888) 279-6917
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
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
How to Qualify for a Home Loan with Less than Stellar Credit
There are a variety of circumstances that can lead to a low
credit score. Learn how you can get a badcredit mortgage Arizona and qualify for a home loan, even if your credit is
less than perfect.
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 mortgage 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.
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.
One type of loan 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.
This means that you won’t have to come up with a large chunk for a down
payment. 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.
A second 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.
Another type of bad credit mortgage in Arizona that is available is a hard
money loan. A hard money loan is secured through a mortgage broker but is
backed by investors instead of a bank. This is especially beneficial for people
looking to do a fix and flip or short term purchase. Depending on the merit of
the property you are purchasing as well as potential for income, investors will
often invest capital, even if your credit score is lower than what is ideal. It
should be noted that hard money loans are short term loans only. They cannot be
used to purchase a home you plan to live in for any significant amount of time.
Make sure to know your options for home loans with bad credit.
Once you have decided to stop letting your credit score
define your homeownership goals, find a broker to work with. Finding a mortgage
broker that specializes in bad credit
mortgage Arizona will ensure that you are receiving all the options to make
owning a home a reality.
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel: (623) 582-4444 | Fax: (888) 279-6917
www.level4funding.comTel: (623) 582-4444 | Fax: (888) 279-6917
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
23335 N 18th Drive Suite 120
Phoenix AZ 85027
Monday, January 26, 2015
How Do Sub Prime Mortgages Work?
In this post we will discuss the details of sub prime lending,
including what are subprime mortgages and how these types of mortgages work.
After that, we will show you ways to apply for a sub prime mortgage and how to
obtain a sub prime mortgage.
What are sub prime mortgages?
When we break down the phrase “sub prime mortgage”, sub prime generallymeans adequate, satisfactory or otherwise less than prime. When it refers to a
mortgage, it means that generally speaking the loan is not at an ideal interest
rate. However these home loans that are sub
prime mortgages are specifically tailored to unique financial situations.
When you want to finance a house, a sub
prime mortgages acts as instant qualifier until your credit score is
improved.
How do sub prime mortgages work?
Financing a home with a sub prime loan generally works the same way as
a conventional loan. The only difference is that you will be working with a
private lender. That is, you will be responsible to make payments towards the
sub prime loan that is held by the private lender. Qualifying for a loan held
by private lending is rather a simple process as sub prime mortgages are
specialized for people who have credit problems.
How do I obtain a sub prime mortgage?
Compared to a conventional lending process, the process of qualifying
for a sub prime mortgage is generally much simpler. You can obtain a sub prime
mortgage through any private lending individual or company. It is advised to do
your research and take your time when looking for a private mortgage lender.
Take a look at the company’s longevity of their business, number of credentials
and any customer reviews they may have.
One well-known, qualified company in Arizona that has professionals
with many years of real estate experience is Level4Funding. Dennis has over 40
years experience in the housing business and can aid individual who seek sub prime mortgage. Call him at
623-582-4444 to schedule an individual consultation today.
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel: (623) 582-4444 | Fax: (888) 279-6917
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
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
Bad Credit Home Loans are More Common Then You Think
When it comes to buying a house or any other large purchase item, the
ability to show that you are a responsible borrower is essential. Just because
someone has bad credit does not mean they are irresponsible or lack the income
to make monthly payments on a loan. Hopefully there is still a chance that
people with bad credit can still get a mortgage with Bad Credit home loans. Bad Credit loans are therefore more common
than you may think.
How do people end up with Bad Credit home loans?
Bad Credit home loans are
specialized to deal with people who want a mortgage but have a poor credit
history. There are many circumstances that can lead to bad credit. People with
bad credit may have a missed a few payments in the past or simply have an
untraditional job, like a self-employed contractor. These kinds of
circumstances hinder a person’s ability to take out traditional loans,
especially for expensive items like a house. Without the ability to get a
mortgage, bad credit individuals are out of luck when it comes to purchasing
the house they want. Without a mortgage, they would have to continue renting or
consider a much simpler living arrangement. They would have to qualify for a smaller
loan or even pay in cash until their credit is improved. Improving bad credit
also could take many years and a lot of patience. Many borrowers cannot wait
that long and consider alternative ways of borrowing. The most common method is
to apply for a mortgage specifically made for people with bad credit.
What do people do to qualify for Bad Credit home loans?
Look in your phone or other common news directory in order to find a
bad credit loan professional. Be sure to check out their reviews and other
reports of their business practices. However if you are looking for an
experienced lender, speak to Dennis Dahlberg at Level 4 Funding, LLC. With over
40 years of experience in real estate buying and selling, he knows what it
takes to get approved for a mortgage despite bad credit. Call him today at
623-582-4444.
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel: (623) 582-4444 | Fax: (888) 279-6917
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
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027
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