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

Arizona home loan mortgages for bad credit

Arizona home loan mortgages for bad credit: Using Adjustable Rate Mortgages and Other Subprime Loans to Your Advantage

Having bad credit can make it almost impossible to get a home loan but there are lenders that offer programs for  Arizona mortgages for bad credit. There are different options available to help subprime borrowers that can also be taken advantage of by borrowers with good credit.

Close to 42 million Americans have bad credit, which is approximately one quarter of all individuals with active credit accounts. This is defined as a score of less than 640 and can make it difficult to qualify for a car loan, home loan, credit cards, and even store accounts. Some individuals with bad credit scores may even find that they have trouble getting and keeping a job due to credit checks by their employer. For many individuals with bad credit, buying a home seems impossible. However, many mortgage brokers offer Arizona mortgages for bad credit programs to help Arizona residents qualify for home loans.

One type of loan that is available for people with bad credit is an Arizona 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 7 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. Although an ARM is a type of Arizona home mortgages for bad credit, it can also be beneficial for borrowers with good credit.

A second type of Arizona mortgages for bad credit 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. These are designed primarily for real estate investors.

 A third type of loan 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.

When Does a Bad Credit Mortgage Make Good Financial Sense?

For some borrowers, an Arizona home loan mortgages for bad credit program is the only option they have to purchase a home. However, some of these bad credit loans can benefit traditional borrowers as well. Specifically, an adjustable rate mortgage. An ARM can save you thousands of dollars in interest over the life of your loan and makes sense in certain lending situations. Here are five situations that could benefit from an adjustable rate mortgage:

1. You have bad credit, but you are working on it. An ARM is a fantastic option to help rebuild your credit score. If you know you will be able to qualify to refinance before the rate adjusts, it is a good way to get into a home and start rebuilding your credit score.
2. You expect your income to increase. If the loan resets, you will be able to pay the higher interest payments because you will be earning more money.
3. You plan to fix up the home and sell it for a profit. If you are not planning a long term investment, an ARM can save you money while you are renovating. In addition, you may also want to look into a hard money loan in this case as they can help investors with bad credit to fix and flip various properties.
4. You expect a windfall. You know you will be able to pay the home off early due to an inheritance. Then the ARM can save you interest while you wait to pay off the home.
5. You plan to sell your home prior to the rate raise. If you only plan on living in your home for a short period of time, an adjustable rate can save you money. If you sell before the rate raises you will never have to pay the higher interest rate.

Talk with a Arizona mortgage broker to determine if an 

ARM or other bad credit loan is right for you.

Whether you need to rebuild your credit or are in a situation where you could benefit by taking advantage of a bad credit loan, a mortgage broker can help you determine the right product for you. A broker or private equity investment firm can help you navigate the ins and outs of Arizona mortgages for bad credit and determine the best next steps to qualify for a home loan. 

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 bad credit mortgage lenders: Finding the Right Mortgage Lender

If you have a low credit score, you may find yourself find yourself in the market for Arizona bad credit mortgage lenders in order to purchase or refinance a home. There are different lending institutions that can help individuals and families qualify for a home mortgage.

Bad credit can affect your entire life. You may feel that your credit score is hanging over your head, keeping you from qualifying for car loans, mortgages, credit cards, and may even keep your from getting certain jobs. If your credit score is below 620, you probably think that owning a home is beyond your reach. As depressed as you may feel about your credit, it is important to know that you are not alone. Nearly 25% of credit using Americans have what is classified as sub-prime credit, meaning that their FICO score is below 620. In addition, the average credit score is about 640 meaning that most Americans do not have an “excellent” or even “good” credit rating.

With many Americans falling into the “fair” or “poor” credit classifications, there are many Arizona bad credit mortgage lenders that can help sub-prime borrowers secure a home loan to purchase a residence or investment property. If you are searching for a bad credit home loan, it is important to know all of your options as far as lender types and institutions.

One type of lender is a bank. A bank is the most common type of lending institution and usually the entity that 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 main downfall of bank mortgage loans 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 Arizona bad credit mortgage lenders.

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 Arizona bad credit mortgage lenders.

What to Know About Bad Credit Mortgage Loans

As you can see, there are a few different lending options for borrowers with bad credit. If you are in the market for a home loan with a sub-prime credit score, a private investment company can be a good option. However, you need to make sure that you are using a reputable company with a proven track record. Ask about the credentials of the broker and come prepared with a list of questions to ask. Make sure that you find out about the interest rate you will be charged and be aware that it will most likely be a bit higher than what you could get at a bank with good credit. The reason your rate is higher is that you represent a higher “risk” than a prime borrower. You will pay extra for this risk but usually it is not much compared to the appreciating investment that comes from owning real estate.

Make sure you find the right lender for you.

You should always feel comfortable with your lending firm. Your broker or agent should be able to explain all of the terms of your loan to you clearly and also outline your monthly payments and explain any extra fees. Ask lots of questions and don’t be afraid to get second and third estimates. Finding a mortgage broker or equity firm can help you purchase a home and make the American dream your reality. 

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 mortgages for bad credit: Adjustable Rate Mortgages

With increasing interest rates it is becoming harder for many Americans to qualify for home loans. As a result, many borrowers may find themselves searching for Arizona home mortgages for bad credit borrowers. Many of these loan types can help both prime and sub-prime borrowers qualify for the home they need.

When interest rates on home mortgages rise, it has a big impact on the mortgage loan market. In late 2014, rates on tradition 40 year mortgages rose from about 3.5% to 4.5% or more. This significant increase had a dramatic effect on monthly mortgage payments for home buyers and made it harder for many borrowers to qualify for home loans. However, there is one type of loan that rates did not increase for and that is an adjustable rate mortgage or ARM. An ARM is typically consider an Arizona home mortgages for bad credit or sub-prime borrowers program, but in the case of rising interest rates it can be a good option for prime borrowers as well.

An adjustable rate mortgage is a mortgage with an interest rate that adjusts after a fixed period. The fixed period is anywhere from 1 to 7 years, with the most common terms being 3 or 5 years. During the initial fixed period, the interest rate on the loan is very low, usually lower than prime. This means that your monthly mortgage payments will be low. After the fixed term, the rate will adjust to a higher interest rate. This will increase your monthly payment amount due to the higher interest payments. When your interest rate does reset, it will be to a higher than prime rate.

Until recently, it only made sense for individuals looking for Arizona mortgages for bad credit to look into adjustable rate mortgages. With traditional mortgage rates low, prime borrowers could easily qualify for and afford the home they needed with a 30 year fixed rate. However, once interest rates rose, monthly payment amounts increased by hundreds of dollars each month and many borrowers were unable to qualify for the loan amount they needed. As a result, many prime borrowers benefited from an adjustable rate mortgage.

Benefits and Risks of an Adjustable Rate Mortgage

The benefits of an adjustable rate mortgage for both prime and sub-prime borrowers are easy to see. When the interest rate on a traditional mortgage is high, the payments on an ARM can be much lower. For example, if you were to qualify for an adjustable rate mortgage with a rate of 3% (current rates are between 2.5 and 3.1%) with a $200,000 purchase price, your monthly payment would be roughly $850 a month. If traditional rates were at 4%, that would increase your monthly payment to over $950 a month (for principal and interest only). If you were unable to qualify for that monthly payment, you would need to look for a cheaper home. In fact, to get a payment equivalent to $850 a month, you would need to decrease your budget by almost $25,000. In some instances that may mean you would be unable to buy the home you want in the neighborhood you want to live in. For many bad credit borrowers, and adjustable rate mortgage is an ideal Arizona home mortgages for bad credit program because it allows them to qualify for a more expensive house with lower monthly payments.

The main risk with ARMs is that the interest rate is subject to change throughout the life of the loan. The interest rate is locked for only a fixed amount of time. After that it will reset annually and your monthly payment will go up. In some cases it can even skyrocket. The increase in monthly payments combined with plummeting real estate values is part of what caused the housing collapse in the mid-2000s.

If you get an Arizona adjustable rate home mortgage, 

make sure you know what you are getting into.

Before you consider an ARM, make sure you understand the terms of your loan and what that may mean for your payments in the future. Look at the annual interest increases as well as the possible increases for the life of the loan. The short term interest rates for ARMs are still low but there is a possibility they will increase. Make sure to look at realistic scenarios for how your rate may or may not increase and what effect that will have on your monthly payment. One of the main problems with ARMs is that some borrowers may overextend themselves and not be able to afford their home once the rate resets. One of the best ways to examine all of the possibilities is to talk with a licensed broker who can help you work out the numbers and decide if an ARM is the right option 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

Wrecked Credit History? Consider Arizona Home Loans with Bad Credit

People can sometimes get caught up with financial issues by tending to apply for unnecessary loans, max-out credit cards or borrow emergency money from lending firms. Due to unexpected expenses, individuals will sometimes have to delay payments or worse, they will default on their debts. Doing so will now cause these people to obtain a very poor credit score.

When the time comes that you need to apply for another loan or you want to apply for a housing loan, you will be in trouble. When applying for a housing loan or a mortgage, lenders and banks are very scrupulous in checking you credit history. These financing agencies will have to dig through all your finances including credit card bills, bank reports, present loans, etc. Before you can get your loan application approved, they will evaluate your financial situation and rate your resulting credit performance.

And yes, because of these unpaid loans and delays in payments, you will likely to tagged as having a wrecked credit history. You will then have to consider applying for Arizona home Loans with bad credit.

Filing an application for a mortgage involves having to improve or clear up your bad credit history. These types of loans are best suited for people with the following issues:

• A very unfavorable credit history
• People who still have existing home loans
• People who are drowning in too much debt
• Borrowers who have huge bills from credit card companies
• People who are caught up in personal loan defaults and amount over dues
• Individuals whose loan applications have been previously declined by other banks and lenders

Applying for Arizona home Loans with bad credit gives people with poor credit history to take advantage of subprime mortgage loans, that enable them to finally get an application approved. However there is a slight catch. Since the lender is the one burdened with higher risk, it will cost the borrower a higher interest rate.

But don't let that stop you. When a subprime mortgage is used responsibly, a lower interest rate may be allowed. The State offers responsible borrowers what they refer to as an Adjustable Rate Mortgage or ARM. This allows the borrowers to enjoy a lower interest rate in a prescribed span of time, specifically 1 to 7 years. After the lock-in period agreed upon, the interest will eventually increase to a higher rate.

Further by using an ARM, the interest rate can be leveraged. The homeowner can have the loan refinanced that will result in a lower mortgage rate, or simply apply for another Adjustable Rate Mortgage.

Applying for Arizona home Loans with bad credit is somethingto be taken seriously. 

If the borrower has another mortgage default, it would really difficult for another loan application to be approved. Make sure you are following the right steps to apply of a mortgage by contacting us at Level 4 Funding. Don't hesitate to give one of our knowledge loan professionals a call. Contact us at 623-582-4444 and speak to one of our friendly associates.

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 Catch a Great Deal on an Arizona Mortgage with Bad Credit

When we look around where we are currently staying, we are always wishing to be able to move in a great place with breathtaking outdoor views and local quality cuisine. Some of these places can be found in Arizona and this is a great place to raise a family, but how can anyone do that if they have a bad credit rating? How can you give your family a home in a place they have always dreamt of? Do not fret because you can always apply for an Arizona mortgage with bad credit. A bad credit loan allows individuals to find a mortgage even with their bad credit rating. Although interested borrowers will need patience and perseverance, due to the difficultly in finding a mortgage if you have a bad credit record. However, there are some steps you can use to increase you chance of being approved for an Arizona mortgage with bad credit.

• File an application to lenders who are not very particular with credit scoring. This is because most lenders use a computer-based system that is called credit scoring, to assess home loan applications. The data they collect from the application is given a rating. If the computer shows a score with bad risks, the application is automatically declined before an actual person has a chance to hear the loaner’s story. If you apply to a lender who does not use credit scoring, a real person assesses the application and any past reasons for having a bad credit. This person will then evaluate the loaner’s personal situation, which will be used in the decision-making process.
• Avoid mortgage insurances because if you apply for a home loan, you will be required to pass two approvals. The first one is from the lender and the other one is from the mortgage insurer who protects the lender in case you fail to pay the loan.
• Seek professional advice regarding your credit report. There are a number of credit repair specialists or agencies that can help clean up your credit report. Speak to them or to a solicitor if there are any possibilities of removing bad entries on your credit report.
• Do not shop for too many lenders. It is a must that you do not apply to lots of lenders when you search for a home loan. This is because each time you turn in an application, it is recorded on your credit report. If any lenders happen to reject your application, it will make a big impact on your credit report.
• Apply for an FHA-insured loan provided by an FHA-approved lender. Because it is government-guaranteed, they allow lenders to serve clients who are considered “high-risk” because of an undesirable credit report. The FHA does not follow strict guidelines used by conventional lenders. 

They also require a smaller down payment compared to conventional loans. The funds can also be borrowed or be given as a gift by a relative or a non-profit financing agency.

These steps can help individuals planning to catch a deal with an Arizona mortgage with bad credit. After being approved for a loan, you should work hard to prove to a lender that your bad credit is just a part of your past and in addition, you will try really hard to avoid coming across the same problems in the future. At Level 4 Funding, we believe that taking these steps to apply for a loan is worth it if you are looking for a home in Arizona. Call us today at 623-582-4444.

Stuck Applying for Arizona Bad credit home loans? We got you covered!

                The majority of us are not happy with our way of living and the place we are staying. But no matter how hard we try, we cannot easily transfer from one location to another. We are content to stay where we are because it will mean that another loan application must be made. This is easy for those who have a good credit rating but those who have a bad credit rating, may find it hard to look for their dream home environment. However there is a solution, which is to look for Arizona bad credit home loans. These types of loans allow borrowers to obtain a home loan within their tastes, even with bad credit history.

With a bad credit home mortgage, it seems as though individuals who want to purchase a new Arizona home have hit the jackpot. Because Arizona is a dream place for nearly all Americans with its beautiful weather conditions, breathtaking natural views and delicious food, they could not ask for more. If prospective buyers are still having a hard time with the application process, here are some suggestions to use for worry free Arizona bad credit home loans.

• Check credit reports  Because all Americans are entitled to have a free yearly credit report from the Federal Trade Commission, borrowers just need to ensure that their report is accurate before they can pass for a mortgage. If the FTC found any errors or inconsistency in the reports, they could report it to the credit company and provide them with documentation to support their plea.
• Expect to pay more interest Because of a borrower's bad credit report, they should expect to pay more for their mortgage. Borrowers need to prepare to pay for a higher interest rate or an ARM (Adjustable Rate Mortgage) with a changing interest rate
• Eliminate other debt Due to a high debt to income ratio, prospective borrowers will have a hard time to achieving a proper mortgage. All credit balances should be paid off so that new buyers can be approved for a home loan.
• Demonstrate a stable income New homebuyers need to prove to their lender that their bad credit rating is a thing of the past. Also it is wise to reinstate how you have changed the ways you handle your loans. Borrowers should guarantee lenders that their job is stable and they are able to make timely payments.
• Write down explanations regarding the negative items There are times where it is best to explain to lenders the reason behind problems in paying bills. It is best to do explain problems before applying for an application. Additionally, a good reason to do this is so lenders will have an understanding that borrowers problems are in the past, which may result in an approved loan application.
• Consider government programs They are loans guaranteed by the federal government, which likely will have flexible credit requirements. This is perfect for individuals with bad credit ratings.
• Immediately look for a cosigner New homebuyers could ask family members to cosign for them, which might help them qualify for a mortgage despite bad credit. Borrowers just need to keep in mind that if they fail to pay their debt, their cosigner is the one who will shoulder the remaining payments.

For those who are considering Arizona bad credit home loans, do not think twice because Arizona is a great place for building and raising a family. Dennis Dahlberg is indeed a well-known family man and knowledge loan professional. Give him a call today at 623-582-4444 to learn more about a bad credit loans and how you can get approved.

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 bad credit mortgage lenders: Who to Call When You Need Help Qualifying for a Home Loan

If you have bad credit you probably are not able to qualify for a traditional home loan through your bank. However, despite your credit score, there are many Arizona bad credit mortgage lenders that can work with you to find different loan types and programs to purchase a home.

Bad credit can affect your entire life. You may feel that your credit score is hanging over your head, keeping you from qualifying for car loans, mortgages, credit cards, and may even keep your from getting certain jobs. If your credit score is below 620, you probably think that owning a home is beyond your reach. As depressed as you may feel about your credit, it is important to know that you are not alone. Nearly 25% of credit using Americans have what is classified as sub-prime credit, meaning that their FICO score is below 620. In addition, the average credit score is about 640 meaning that most Americans do not have an “excellent” or even “good” credit rating.

With many Americans falling into the “fair” or “poor” credit classifications, there are many Arizona bad credit mortgage lenders that can help sub-prime borrowers secure a home loan to purchase a residence or investment property. If you are searching for a bad credit home loan, it is important to know all of your options as far as loan types. If you have a less than stellar credit rating your best bets for a home loan are an FHA loan or an adjustable rate mortgage.

An FHA loan is a loan that is backed by the federal housing administration. This is a branch of the federal government. The FHA does not give out loans. Rather, they give the banks or other lending institutions mortgage security. Once a borrower is approved by the federal housing administration, the government backs, or insures the loan. If the borrower ends up defaulting, the lender can recoup its lost funds from the FHA. An FHA loan can benefit you as a bad credit borrower because banks will be more likely to lend money to you. Also, the FHA has specific programs like “Home in 5” or the “Home Affordable Refinance Program” that are meant to benefit borrowers who may not have good enough credit for a traditional mortgage. Some things to keep in mind about an FHA loan is that the credit will cost you more than a traditional loan. To secure the loan you will have to make monthly mortgage insurance premiums or MIP payments. These can add anywhere from 80 to 300 dollars a month to your housing payments. However, there are options as far as seller assistance or up-front pay down programs you may want to look into to help reduce your monthly mortgage payments. In addition, you will need to make a 3.5% down payment when you purchase the home so make sure you have this amount in savings.

Another type of loan you will want to discuss with your Arizona bad credit mortgage lenders is an adjustable rate mortgage or ARM.  An adjustable rate mortgage is a mortgage with an interest rate that adjusts after a fixed period. The fixed period is anywhere from 1 to 7 years, with the most common terms being 3 or 5 years. During the initial fixed period, the interest rate on the loan is very low, usually lower than prime. This means that your monthly mortgage payments will be low. After the fixed term, the rate will adjust to a higher interest rate. This will increase your monthly payment amount due to the higher interest payments. When your interest rate does reset, it will be to a higher than prime rate. An ARM is a good option for bad credit borrowers who are planning on moving before the rate resets, or who are in the process of rebuilding their credit and will be able to refinance to a traditional mortgage at the end of the fixed rate period. One important note about an adjustable rate mortgage is that it will require a 10% down payment so make sure that you have that to put down on your home.

Arizona bad credit mortgage lenders and the Media

Many borrowers with bad credit are still leery of investing in bad credit mortgage programs due to some of the bad press that has surrounded them. Bad credit mortgages and loans to sub-prime borrowers have been largely blamed for the housing crisis of the mid 2000s which resulted in many borrowers losing their homes due to foreclosure. Although some bad credit loans may have been to blame, it is important to note that other circumstances like an economic recession and falling housing values also played a key role in the foreclosure crisis. However, due to the negative press many banks shy away from sub-prime borrowers.

If you have been turned away by a bank, don’t let that keep you from home ownership.

Banks are not the only lending institutions out there. There are many private investment firms and brokerage companies that will act as Arizona bad credit mortgage lenders for individuals and families looking to purchase real estate in Arizona. A mortgage broker or mortgage company can help you find the right loan product and take the next steps in purchasing a new home.

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