Arizona Home Loans for Bad Credit Borrowers: Hard Money Loans

If you have a low credit score, you may think that investing in real estate is impossible. However, Arizona home loans for bad credit and even qualify for loan programs designed specifically for real estate investors. there are a variety of programs geared towards real estate investing and it is possible to find

If you have bad credit, it probably feels like you will never get ahead. You are stuck in what feels like an endless cycle of work and debt. Working to pay down debts but never making enough to do it completely. You may even be stuck in a dead end job that you hate. With the average American spending nearly 33% of their time at work, it is far too time consuming to be doing something you hate. But if you have bad credit, you may not have time to job hunt as you are too busy trying to make ends meet.

One way many successful Americans have broken out of the daily grind is to work from home doing full time real estate investing. However, if you have bad credit, it may seem like this dream is beyond your reach. It is not. There are different Arizona home loans for bad credit programs that can help you qualify to purchase investment properties.

Arizona Hard Money Loans

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. An Arizona 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.

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.

In order to obtain 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.

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 loans 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.

A hard money loan can be the perfect option to help your work from home and make more money.

Once you have chosen a property and secured a hard money loan, you can work on renovations or selling at your own pace. You get to be your own boss. You will also earn money once you sell the property and the sum you make will most likely be more than you make at a low level job. You can use the extra income to help pay off debt and get your credit back on track. In addition, a hard money loan is a great Arizona home loan with bad credit option to help you rebuild your credit history.

A hard money loan is a win-win situation. You get extra money and the potential to start your own business of sorts, making your own schedule and being your own boss. Talk with a broker, investor, or other financial professional to start investing with hard money loans.

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 Loans with Bad Credit

Arizona Home Loans with Bad Credit: Using Arizona Mortgage Brokers and Investment Companies to Help Make your Dreams Come True

If you have bad credit, it may seem impossible to qualify for Arizona home loans with bad credit. However, there are brokers and investment companies that are there when you need them and can help you find a loan type to purchase your dream home.

Having bad credit can make you feel isolated and alone. According to many surveys Americans with bad credit suffer from depression and feelings of hopelessness. These feelings are usually made worse by way you are treated by financial institutions if you have bad credit. You will probably be turned down for credit cards, auto loans, and may not even be able to get certain jobs.  If you are looking for Arizona home loans with bad credit you will most likely be denied by traditional banks. It may seem like owning a home is impossible. However, if you find the right type of lender, finding a home loan, even with bad credit is possible.

Types of Lenders That Are Here to Help When You Have Rotten Credit

One type of lender is a bank. A bank is the most common type of lending institution and usually what 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 bank will not shop around to find better interest rates, what they offer is what you get. Often this can mean that you end up paying a higher interest rate than if you used a different type of lender. A second downfall of bank mortgage loan 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 find Arizona home loans with bad credit. 

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 borrowers with bad credit. In addition, private investment firms usually offer different types of loans than you can find at a bank or even with a mortgage broker. However, it is important to make sure that you are working with a legitimate financial institution that is operated under a broker license. You can find private lending firms through a mortgage broker or other investment professional.

See the difference the right lender makes, call a broker today.

A broker can help you find the right loan and right investment company for your financial situation. Even if you have bad credit, there is a lender and a loan that is right for you. With the majority of Americans having a “fair” or “poor” credit rating, you are in good company. Talk with a financial professional about Arizona home loan with bad credit. Don’t put your dreams on hold any longer.

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 buy a house with bad credit in Arizona - Get your Arizona Home Loan

If you have bad credit you may find yourself wonder How to buy a house with bad credit in Arizona and it may seem impossible. However, there are a variety of loan types and programs that can help you purchase a home in the Grand Canyon State as a primary residence or as an investment.

With sunshine, desert landscapes, mountain trails, hiking, skiing, snow, and majestic views, it is no wonder that Arizona is experiencing a population boom. If you find yourself wanting to move to Arizona, you are in good company. However, if you are one of over 42 million Americans with bad credit, you may find yourself wondering How to buy a house with bad credit in Arizona. You may believe that Arizona Home Loan is beyond your reach and that you are destined to rent forever. That is simply not the case. With new federal programs and a variety of loan types there are many ways to obtain a home mortgage even if you don’t have good credit.

The first step to buying a home with bad credit is to find a mortgage broker you can trust. In Arizona, all mortgage brokers whether they work for a private investment company, a mortgage company, or are self-employed must be licensed. This means that the broker has passed a test as well as completed required coursework. In addition, if the broker works for a company, the company must also be licensed by the state. The state licensure helps to ensure that your broker is knowledgeable about current mortgage laws, rates, and programs.

Once you have found a licensed broker, you should ask them a few questions to make sure that are the right broker for you. First and foremost, you should ask about lender fees. The amount of fees will vary from lender to lender and can have a big impact on your overall closing costs. Secondly, you should ask about turn around times for processing and underwriting as well as general questions about the broker’s experience. You may want to ask how many loans they have helped close as well as what the general interest rate trends are. Thirdly and probably most importantly, you need to ask about new loan programs and How to buy a house with bad credit in Arizona. If you have bad credit, the answer to this question is very important and will help you decide if you have found the right broker for your mortgage needs.

Arizona Home Loan Programs Your Mortgage Broker Should Mention

When you ask about federal mortgage programs and How to buy a house with bad credit in Arizona, there will be a variety of answers but your broker should mention at least three types of mortgages. One type of loan you mortgage investor will most likely discuss with you is offered to bad credit borrowers is an FHA loan. An FHA loan is a government backed loan. Each month you pay extra insurance against default. The loan is secured by the Federal government so lenders are more likely to give them to borrowers with bad credit. In order to qualify for an FHA loan you will need to have 3.5% of the purchase price to put down. You will also pay extra for monthly mortgage insurance which can vary based on the amount of your loan. For many bad credit borrowers an FHA loan is a good path for homeownership.

Another type of loan that is a conventional loan. A conventional loan is a traditional 30 year mortgage with a fixed interest rates. Most current programs require at least at 5% down payment. This is the loan most often given out by banks and is usually the hardest to qualify for with bad credit. However, your broker may know of private equity companies and investors that give out conventional mortgages for sub-prime borrowers. You will usually end up paying a higher interest rate based on your low credit score, but the interest rate is fixed for the life of the loan. Also, if you plan on using on time mortgage payments as a way to rebuild your credit, you can refinance later when interest rates are low. 

A third type of loan your mortgage professional will discuss is an adjustable rate mortgage or ARM. An ARM is a mortgage that has a fixed interest rate for a set period of 1 to 7 years. During that period you will pay a relatively low interest rate, usually lower than the prime rate. After the initial fixed period, the rate will reset to a higher rate and your mortgage payment will increase. Borrowers with bad credit can take advantage of this program as a way to own a home because the initial payments are low due to the low interest rates. Keep in mind that after the rate resets your payment will increase significantly. An ARM is a good option for borrowers who plan on either selling or refinancing before the rate resets.

You may also hear about hard money loans as well as privately backed equity loans if you are planning on using the property primarily as an investment.

If you are looking for an Arizona Home Loan with bad credit, contact a broker today.

A broker can help you navigate the complex world of home loans. Make sure to find a broker you can trust with expertise and experience to help you buy your 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

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