Hard Money Loans: Arizona Bad Credit Home Loans for Real Estate Investing

If you have bad credit and are looking for Arizona Bad credit home loans, a hard money loan can be a valuable investment tool. Taking advantage of hard money lending can allow bad credit borrowers to take advantage of real estate investment opportunities.

If you have a credit score of 640 or less, chances are that you will be denied a home loan from a traditional bank. For many sub-prime borrowers, the idea of homeownership seems beyond their reach and real estate investing is out of the question. However, there are certain Arizona Bad credit home loans that allow borrowers with bad credit to make real estate investments to help build their personal wealth.

One type of real estate investment loan available to bad credit borrowers is a hard money loan. A hard money loan is a type of asset based loan financing that is secured by real property. Hard money loans are issued by private investors or companies that specialize in hard collateral loans. The lender offers short term capital loans to purchase investment properties. The term of a hard money loan is generally no more than two years although it is possible to find hard money loans that have terms of up to 10 years. This type of loan is designed to make money on real estate for both the borrower and the lender. Hard money lenders focus on the value of property being purchased rather than the assets or credit score of the borrower. For this reason a hard money loan is an invaluable opportunity for an investor looking for Arizona Bad credit home loans to purchase a property as a short term investment.

Hard money loans are available for all property types including commercial, residential, multi-family, and even land loans. Each lender or group of lenders determines the requirements for what types of loans they will give as well as how much money they will lend. If the lender gives loans on residential properties he/she/they are required to be licensed through the National Mortgage Licensing System (NMLS). In order to sure that the lender you are using meets all requirements, it is best to use a broker or investment team that specializes in hard money lending.

Hard money lending has less regulations that traditional loans so it is a good option for borrowers needing Arizona Bad credit home loans due to a low credit score. A hard money lender looks at the merit of the investment, not the credit score of the borrower. If you are obtaining a hard money loan for a residential loan, you will still be required to show proof of income though it is usually less stringent than traditional bank requirements. In addition, the investors in a hard money situation look at the value of the investment, not the credit score of the borrower, making it an ideal loan for a bad credit borrower to purchase a fix and flip and make a profit from buying and selling real estate.

Property Types and Interest Rates

Hard money loans are available for multiple types of property. You can a hard money loan for a residential property, commercial property, multi-family property, and even vacant land. Residential hard money loans are the most highly regulated type of hard money loans. To give residential loans hard money lenders must be licensed and are required to ask for proof of income. Commercial property hard money loans are exempt from these requirements.

Interest rates for hard money loans are usually higher than other loan types. The interest rate is dependent on the lender as well as market conditions. Rates usually hover around 11% but have climbed as high as 21% in the past. The higher interest rates are due to the higher risk assumed by investors in this type of Arizona Bad credit home loans program. In the event of default, the lender’s investment is secured by the real estate that the borrower purchased. The lender can sell the property to recoup its funds.

It is important to remember that a hard money loan is designed specifically for real estate investing. The interest rates are too high to make it feasible as an option to own a property for a significant amount of time. Ideally if you purchase a property using a hard money loan you should sell it for a profit within a couple of years. Once you have paid back the loan amount, you get to keep an additional profit.

Talk with a mortgage broker today about hard money loans.

Hard money loans can be a great tool to help borrowers with bad credit take advantage of real estate investment opportunities. It is important to work with a broker experienced in hard money loans and lenders. In addition, you want to make sure to work with a trustworthy real estate agent and accurate appraisal company.

If you are ready to take the next step in growing your personal wealth with real estate investing, don’t let bad credit hold you back. Talk with a mortgage broker about securing a hard money loan today.

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

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

The Truth about Getting an Arizona Mortgage with Bad Credit

If you are trying to get an Arizona mortgage with bad credit, it is important that you know all of your options. There are several programs available to help Arizona borrowers obtain a home mortgage, even if they have bad credit.

If you have a credit score of less than 640, you are considered a sub-prime borrower in terms of credit worthiness. This can impact your ability to obtain a home loan, care loan, or even a store credit card. You may feel like there is no way out of your situation. However, you are not alone. Nearly 42.5 million Americans have sub-prime credit. In addition, the average credit score is about 678, meaning that the average American has less than stellar credit.

If you find yourself being denied a home loan due to your credit score, there are a number of options to help you find an Arizona mortgage with bad credit. One loan type that is available for borrowers in the market for an Arizona mortgage with bad credit is a hard money loan. A hard money loan is designed as an investment strategy and isn't a good option for owning a home you intend to live in long term. A hard money loan is backed by a group of investors, rather than a bank. The investors will look at your property purchase as well as renovation plans to determine if the loan is a good investment. If you have bad credit they are more likely than a bank to look past your credit score if you have a sound investment idea. Hard money loans are short term loans primarily designed to fix and flip a property for a profit.

Adjustable Rate Mortgages, FHA Loans, and Hybrid Programs

Another type of loan a borrower in Arizona with bad credit might consider is an adjustable rate mortgage or ARM. An adjustable rate mortgage is a short term mortgage with a term of anywhere from 1 to 7 years. During your initial term the interest rate on your mortgage is very low, usually below the prime rate. This makes your payment relatively low as well. The lower monthly payment allows borrowers with bad credit to qualify when they may not be able to for a traditional 30 year loan. After the initial term of you loan, the interest rate resets and your payment may be higher. This can be a good option for someone who is on the road to repairing his credit and will be able to refinance to a 30 year mortgage at the end of the adjustable rate term. One thing to keep in mind with an ARM is that they require a 10% down-payment. This helps ensure that the property value will not drop significantly below the loan amount.

A final type of loan that can help individuals looking for an Arizona mortgage with bad credit qualify to purchase a home is an FHA loan. FHA stands for Federal Housing Administration and this entity gives out a type of government backed loan. Borrowers are only required to make a 3.5% down-payment so it can help keep some cash in your pocket. In addition, the loan is insured by the federal government so banks are more willing to lend to sub-prime borrowers. This insurance will cost you though. Be aware that if you take out an FHA loan, you will be required to pay make PMI payments. These can be anywhere from 80 to over 200 dollars a month depending on the amount of your loan. You will make them until the loan amount that you have is less than 80 percent of your purchase price. The PMI payments are a type of insurance you pay to help secure the investment in case of default.

A less well known type of loan for borrowers with bad credit is an FHA hybrid loan. This loan type combines the government insurance of an FHA loan with the low interest rates of an ARM. This loan does not require as large of a down payment as a traditional ARM and there are also limits on the amount that your interest rate can increase once the rate resets. The Federal Housing Administration controls the market conditions of these loans to make sure that even when it resets to the higher amount, the payment does not rise as significantly as with a traditional ARM.

If you have badcredit and are in the market for a home loan, talk with an Arizona mortgage broker to discuss your options.

A home loan can be a great way to rebuild your credit and put you on the path to having more borrowing capacity. If a home loan seems like a good option, talk with a broker to discuss the specifics on the loan type you are applying for and to find the right program and loan 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

Arizona Homes Loans for Bad Credit Borrowers: FHA and ARM Hybrid Loans

If you are in the market for Arizona homes loans for bad credit borrowers, you might want to consider and FHA hybrid loan program. This loan type combines the benefits of an FHA loan with an adjustable rate mortgage to give borrowers the best of both worlds.

If you have bad credit, a home mortgage is a valuable tool for rebuilding your credit, but it may seem almost impossible to obtain. Most banks will turn away borrowers with a credit score of less than 640. However, nearly 25% or 42.5 million credit using Americans fall into this category. If you find yourself searching for Arizona homes loans for bad credit borrowers, you might want to look into an FHA loan.

The Federal Housing Administration is a government agency that is responsible for helping to insure home loans. In order to qualify for an FHA loan, an applicant must make apply for and receive financing from an FHA accredited lending institution. The Federal Housing Administration then insures the lending institution against loss in case the borrower fails to pay their mortgage on time. The borrower pays an insurance premium for this service of 1.75% of the loan amount upfront (usually financed into the loan amount) as well as monthly PMI payments. In order to qualify for an FHA the borrower also has to make a 3.5% down payment at closing.  This is a good option for borrowers who cannot afford a traditional 20% down payment or who have less than perfect credit. Banks and other lenders are more willing to lend to bad credit borrowers who qualify for an FHA loan because the borrower is insured against default.

Another type of loan that can help Arizona homes loans for bad credit borrowers is an adjustable rate mortgage or ARM. An adjustable rate mortgage is a short term mortgage with a term of anywhere from 1 to 7 years. During your initial term the interest rate on your mortgage is very low, usually below the prime rate. This makes your payment relatively low as well. The lower monthly payment allows borrowers with bad credit to qualify when they may not be able to for a traditional 30 year loan. After the initial term of you loan, the interest rate resets and your payment may be higher. This can be a good option for someone who is on the road to repairing his credit and will be able to refinance to a 30 year mortgage at the end of the adjustable rate term. One thing to keep in mind with an ARM is that they require a 10% down-payment. This helps ensure that the property value will not drop significantly below the loan amount. One of the greatest risks of an ARM is that borrowers will not be able to make monthly payments once the interest rate increases.

FHA Hybrid Loans

A third, less well known type of bad credit loan is an FHA/ARM hybrid loan. The FHA will insure adjustable rate mortgages. This allows bad credit borrowers to take advantage of low interest rates. This interest rate is adjusted annually, based on market indices approved by FHA, and thus may increase or decrease over the term of the loan.

The FHA Hybrid provides for an initial fixed interest rate for a period of three or five years, and then adjusts annually based on market conditions and the terms set by the FHA. The FHA Hybrid loans allow up to a 1% annual interest rate adjustment after the initial fixed interest rate period, and a 5% interest rate cap over the life of the loan. The new payment after an adjustment will be calculated on the current principal balance at the time of the adjustment. This insures that the payment adjustment will be minimal even on a worst case rate change. This is preferable to a traditional ARM because it helps keep the payments relatively low, even when the interest rate increases.

For many lenders the FHA hybrid is preferable because it still allows the loan to be insured against default. For this reason it is also a better option for Arizona homes loans for bad credit borrowers because they will be more likely to qualify for this type of ARM. Finally, the hybrid ARM does not require the 10% down payment that a traditional ARM does. This makes it more ideal for borrowers without several thousand dollars in savings.

If you have bad credit, you might want to investigate an FHA hybrid loan to determine if it the right path to homeownership.

Call a mortgage broker to discuss your home loan options and determine if an FHA hybrid product is right for you. Federal programs change regularly and a broker can help ensure that you choose the best mortgage product for you. Don’t continue to let your bad credit hold you back. Find an Arizona mortgage broker today. 

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

Adjustable Rate Mortgages: Arizona Home Loans with Bad Credit

If you have a credit score of less than 640, you probably have trouble qualifying for a home in Arizona. If you find this position you want to look into programs that will allow you to qualify for Arizona home Loans with bad credit.

A bad credit score in terms of obtaining a home loan is classified to be at or below about 640, but this has varied with time and location. However, according to national credit bureaus, the average American’s credit score is around 678, meaning that most people don’t have perfect credit. If you have bad credit, there are a number of events that could have gotten you there that are beyond your control. Divorce, job loss, inability to make mortgage payments due to an over-inflated housing market, and the recent recession are all factors that have negatively impacted may people’s credit scores.

If you are looking for Arizona home Loans with bad credit you are not alone. 

Approximately 42 million Americans have a sub-prime credit score. A home loan can be a good way to rebuild your credit as long as you plan on making on time payments. One program that is available to sub-prime borrowers seeking an Arizona home Loans with bad credit is an adjustable rate mortgage or ARM.

An ARM is a mortgage that is different than a 30 year mortgage in that it is for a shorter period of time, anywhere from 1 to 7 years. The most commonly offered types of ARMs are 3 and 5 year ARMs. During that time period you have a low interest rate, usually below the prime rate. This low rate means lower payments. The lower monthly payments helps many individuals and families qualify for an ARM who would not be able to qualify for the higher payments of a traditional mortgage. After the initial period, the rate of an ARM adjusts or resets to a higher than prime rate. This will increase the monthly payment amount based on the interest rate you are being charged. Every ARM has certain maximums depending on the type of loan. There is a maximum amount you can be above the prime rate as well as a maximum number of times the loan can reset.

One of the major criticisms with adjustable rate mortgages has to do with what happens after the rate adjusts. Because the interest rate increases, the amount of your monthly payment will also increase. In the mid-2000s, the increase in payments combined with the decline in the housing market led to a large number of sub-prime foreclosures. This has led to many law makers and media outlets to criticize ARMs as being irresponsible lending practices. However, an ARM can be a good option if you are smart about how you use it.

An important thing to keep in mind with an adjustable rate mortgage and really for any Arizona home Loans with bad credit, is to not borrow more than you can afford. If you cannot afford the payment on a $200,000 mortgage at a 30 year rate, do not borrow that much using an ARM, unless you are planning to move long before your rate resets. In addition, make sure to make smart real estate choices. Before you purchase a home look at the area and the overall price history. Don’t buy unless you are relatively certain that the home will increase in value. Also keep in mind that federal regulations require a 10% down payment up-front. Make sure that you have this money available before you close on your ARM loan or you will not be able to close. If the 10% down payment is more than you have available in savings, you might want to consider and FHA adjustable rate hybrid option. This loan type offers many of the benefits of an ARM with a lower down payment and government insurance.

ARMs for Prime Borrowers

An adjustable rate mortgage is a great program for borrowers needing an Arizona home Loans with bad credit, but it is also a great option for prime borrowers in certain situations. An ARM allows you to take advantage of low monthly payments and can save you a significant amount in interest payments. If you are wanting to purchase a property and will be able to sell or refinance before the rate resets, an ARM can be good option even if you would qualify for a traditional mortgage. Many savvy borrowers take advantage of adjustable rate mortgages to make real estate investments and purchase fix and flip houses.

An adjustable rate mortgage can be a good option for sub-prime and prime borrowers alike.

Find a mortgage broker to fully discuss your home loan options and determine if an adjustable rate mortgage is a smart financial decision 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

Arizona Mortgages for Bad Credit: FHA Loans

An FHA loan is a home loan backed by the Federal Housing Administration. It is a type of mortgage that allows lower income and bad credit borrowers to obtain home loans. If you are searching for Arizona mortgages for bad credit, and FHA loan may be the perfect option for you.

If you have bad credit, a home mortgage is a valuable tool for rebuilding your credit, but it may seem almost impossible to obtain. Most banks will turn away borrowers with a credit score of less than 640. However, nearly 25% or 42.5 million credit using Americans fall into this category. If you find yourself searching for Arizona mortgages for bad credit borrowers, you might want to look into an FHA loan. There are FHA loan programs with a FICO Score as low as 550.

The Federal Housing Administration is a government agency that is responsible for helping to insure home loans. In order to qualify for an FHA loan, an applicant must make arrangements with an FHA accredited lending institution. The federal government via the Federal Housing Administration then insures the lending institution against loss in case the borrower fails to pay their mortgage on time. The borrower pays an insurance premium for this service of .8% of the loan amount upfront (usually financed into the loan amount) as well as monthly PMI payments. In order to qualify for an FHA the borrower also has to make a 3.5% down payment at closing.  An FHA loan primarily serves individuals who cannot afford to make a traditional down payment or who may have less than perfect credit.

Banks and lenders are more willing to give out FHA loans as Arizona mortgages for bad credit because there is a two tiered system of insurance to prevent loss in case of default. The first type on insurance is an upfront payment that is rolled into the cost of the loan. The second type of insurance is a mortgage insurance premium or MIP. The MIP is paid monthly and is added onto the cost of the mortgage payment. The MIP is a percentage of the loan amount that is determined by the value to debt ratio of the property as well as the length of the loan term. If you decide to obtain and FHA loan, it is important to keep in mind that you will make higher monthly payments due to these types of insurance.

The FHA Loan Process

If you have been researching Arizona home loans for bad credit and have decided that an FHA loan is a good option for you to purchase Arizona real estate, it is important to know what to expect in the qualification process. One key detail is that the Federal Housing Administration does not make loans. In order to obtain a loan you need to find an FHA approved bank or mortgage broker. Each bank can set its own interest rates and loan terms so it is important to shop around. A mortgage broker may be a better option because a broker can shop different banks for you to find the most favorable loan terms.

Once you have found a lender, the lender will assess you and determine if you qualify for a loan. You will be asked for proof of income and the lender will run your credit. If you have bad credit, you may be charged a higher interest rate but will often still qualify for an FHA loan due to the government backing. In addition, FHA loans allow for certain economic set-backs that can allow many bad credit borrowers to qualify for a home loan.

If you have little credit or bad credit, the FHA will also allow for a co-signer or co-borrower. Unlike other loans, the co-borrower does not have to live at the property with you but you can use their credit score to help you qualify for the loan. The FHA also has a hybrid adjustable rate mortgage program that can allow borrowers with high debt to income ratios to take advantage of low interest rates to purchase a home.

If you are looking for Arizona home mortgages for bad credit, an 

FHA loan may be a good option for you.

As with all loans, there are pros and cons related to FHA mortgages. They can be a good tool to help low-income buyers or borrowers with bad credit, or first time homebuyers without the resources to make a hefty down payment. It is important that you meet with an Arizona mortgage broker to discuss FHA loans along with other programs related to Arizona mortgages for bad credit. Talking with a broker will ensure that you know all your options and can make an informed decision about your home purchase.

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

Qualifying for an Arizona Mortgage with Bad Credit

If you have less than perfect credit, you can still purchase a home in the Grand Canyon State. There are many options for borrowers looking to find an Arizona mortgage with bad credit. Learn about the different programs available and how to qualify for each type of loan to make your real estate dreams a reality.

Having bad credit can seem like an impossible situation. If you have a bad credit score, you will have trouble qualifying for a mortgage, getting a car loan, or even obtaining a store credit card. You may even have trouble finding a new job because many employers run your credit score. The only way to improve your credit is to make on time payments which is impossible if you can’t qualify for credit to make payments on. You may feel like there is no way out. Luckily, there are programs that allow applicants to obtain an Arizona mortgage with bad credit. A mortgage is a great way to begin to rebuild your credit history.

A bad credit score in terms of obtaining a home loan is classified to be at or below about 640, but this has varied with time and location. However, according to national credit bureaus, the average American’s credit score is around 678, meaning that most people don’t have perfect credit. If you have bad credit, there are a number of events that could have gotten you there that are beyond your control. Divorce, job loss, inability to make mortgage payments due to an over-inflated housing market, and the recent recession are all factors that have negatively impacted may people’s credit scores.

If you are looking for an Arizona mortgage with bad credit you are not alone. Approximately 42 million Americans have a sub-prime credit score. Don’t let your bad credit keep you from owning a home when there are so many bad credit loan programs available to Arizona residents.

Types of  Arizona Loans for Borrowers with Bad Credit

One loan type that is available for borrowers in the market for an Arizona mortgage with bad credit is an adjustable rate mortgage or ARM. An adjustable rate mortgage is a short term mortgage with a term of anywhere from 1 to 7 years. During your initial term the interest rate on your mortgage is very low, usually below the prime rate. This makes your payment relatively low as well. The lower monthly payment allows borrowers with bad credit to qualify when they may not be able to for a traditional 30 year loan. After the initial term of you loan, the interest rate resets and your payment may be higher. This can be a good option for someone who is on the road to repairing his credit and will be able to refinance to a 30 year mortgage at the end of the adjustable rate term. One thing to keep in mind with an ARM is that they require a 10% down-payment. This helps ensure that the property value will not drop significantly below the loan amount.

A second type of program that a borrower in Arizona with bad credit might consider is a hard money loan. A hard money loan is designed as an investment strategy and isn’t a good option for owning a home you intend to live in long term. A hard money loan is backed by a group of investors, rather than a bank. The investors will look at your property purchase as well as renovation plans to determine if the loan is a good investment. If you have bad credit they are more likely than a bank to look past your credit score if you have a sound investment idea. Hard money loans are short term loans primarily designed to fix and flip a property for a profit.

A final type of loan that can help individuals looking for an Arizona mortgage with bad credit qualify to purchase a home is an FHA loan. FHA stands for Federal Housing Administration and this entity gives out a type of government backed loan. Borrowers are only required to make a 3.5% down-payment so it can help keep some cash in your pocket. In addition, the loan is insured by the federal government so banks are more willing to lend to sub-prime borrowers. This insurance will cost you though. Be aware that if you take out an FHA loan, you will be required to pay make PMI payments. These can be anywhere from 80 to over 200 dollars a month depending on the amount of your loan. You will make them until the loan amount that you have is less than 80 percent of your purchase price. The PMI payments are a type of insurance you pay to help secure the investment in case of default.

Talk with a mortgage broker to determine the best fit for your home buying needs.

Programs and loan types are constantly evolving and changing. A broker can help you choose the right program to fit your financial needs. 

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