Private Hard Money Lender in California, Texas and Arizona: February 2015

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Monday, February 9, 2015

Sub Prime Mortgage Arizona for Regular Borrowers


A subprime mortgage is a loan given to a borrower who is considered to be a higher risk due to a poor credit score. Typically a subprime borrower has a credit score of less than 640, but this does vary. Since the lender is assuming a higher risk, the interest rate is also generally higher. Critics of subprime lending argue that it charges unfair interest rates and further burdens individuals with low incomes and high amounts of debt. However, if used correctly a sub prime mortgage, Arizona can benefit all Arizona home buyers, even those with good credit. There are several types of subprime mortgages available and each type has different advantages and risks. 
  
The most common type of Arizona subprime mortgage offered in the state is an adjustable rate mortgage or ARM. An ARM starts out with a low interest rate that is locked in for a specified period of time, usually between 1 and 7 years. At the end of the term, the rate adjusts to a higher rate. ARMs earned a bad reputation in the mid-2000s for contributing to the foreclosure crisis. However, it is important to note that many of these ARMs were given to buyers with bad credit who overextended themselves by buying homes that were more expensive than they could afford. When the rate reset they could no long make their monthly payments.


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

Using an ARM to your Advantage


For many people, a traditional mortgage actually costs them money and simply does not make sense. Most people do not live in a home for 30 years, in fact the average time frame is 8 to 10 years. Even if they stay for longer, most people end up refinancing their mortgage at least once and some people refinance every 2 to 3 years. This ends up costing a significant amount in interest because in traditional home loans, you pay the majority of you interest during the first half of the loan term. Also, traditional 30 year loans charge a higher interest rate as a type of insurance for the lender. The lender assumes you will take 30 years to pay off the debt. 30 years is a long time and there is a chance that something could happen that would cause you to default. The lender charges you a higher interest rate to earn more money to keep as a type of insurance against default. The terms on an adjustable rate are only about 1 to 7 years so they can offer a lower interest rate since the term is shorter and less risky for the lender. An adjustable rate mortgage has a much lower interest rate than a traditional mortgage which can save you thousands of dollars over the loan term. Using this type of sub prime mortgage Arizona can save you significant amounts of money and should be considered by both prime and sub prime borrowers alike. Here are a few situations when an adjustable rate mortgage actually makes more sense than a traditional 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 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.

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.

4.       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.

5.       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.

There are certain risks for adjustable rate mortgages but these can be minimized by smart investing.

The most important piece of advice regarding ARMs, is to never overextend yourself. An ARM often allows buyers to buy a home that is higher than they could qualify for with a traditional mortgage because the lender looks at the monthly payments. Once the rate resets these can increase and the buyer can actually be priced out of the home they already own. This can lead to default and foreclosure. Talk with a mortgage broker to get the most up to date information about Arizona sub prime mortgage   programs to see what makes the most financial sense for you and your family. 


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

Friday, February 6, 2015

Bad Credit and Arizona Real Estate: Qualifying for a Subprime Mortgage Arizona


With great weather, a stable economy, and a real estate market with great deals, it is no wonder that so many people want to move to Arizona. With some parts of the state getting over 300 days of sunshine each year and skiing in the northern part of the state, it is the perfect place people with any climate preference. The relatively low humidity also makes it ideal for people with respiratory problems and mild winters are great for snow birds. If you find yourself dreaming of moving to Arizona, but have bad credit, you will want to start researching Arizona sub prime mortgage  to learn about the different types of mortgages available in the state for borrowers with bad credit or high debt to income ratios. If you cannot qualify for a traditional mortgage due to a low credit score, a subprime mortgage might be a good option.

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

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

Types of Mortgages Available to Borrowers with Bad Credit


One type of mortgage available to subprime borrowers is what is known as an adjustable rate mortgage or ARM. An ARM starts off at a low interest rate, usually lower than the prime rate around 2-3 percent. After a period of time from 1 to 5 years, the rate then adjusts to a much higher rate anywhere from 10 to 20 percent, depending on market conditions. This will cause your payment to go up rapidly. ARMs got a bad reputation during the housing crisis of the mid 2000s and were accused of being a way for banks to loan money to and take advantage of subprime borrowers. Many people lost their home due to the inability to make the new, higher payments after the rate adjusted. An ARM can be a good option if you are in the process of rebuilding your credit and will be able to refinance to a traditional loan before your rate adjusts. It is also a good option if you are buying a short term home to either fix and flip, or you plan on moving within the low rate period. An ARM is also a good option as long as you budget accordingly so you do not get priced out of your home and wind up unable to pay your mortgage.

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


Another program that is available to low credit borrowers is an FHA loan. This type of loan is backed by the federal government and offers low interest rates and low down payment options. Most FHA loans only require a 3.5% down payment which makes it a great option for borrowers without a large amount of liquid cash assets. This is also a great option for someone buying a second home who may not have the down payment they would have if they sold their first home. The loan is insured by the government so the borrower will end up paying what is called primary mortgage insurance or PMI payments. PMI payments can range from anywhere between 80 and a few hundred dollars so it does increase your monthly mortgage payment. You will make these payments until you have paid off 20% of your home loan.

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


Talk with a mortgage broker to further discuss your loan options. You may also qualify for certain federal programs that offer down payment assistance or cash back at closing. Some of these include the Home in 5 program or the Home Affordable Refinance Program (HARP). Call an Arizona mortgage broker to help get you started on your move to the Grand Canyon State. 

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 Subprime Mortgage: Home Loans with Bad Credit

An Arizona subprime mortgage, is one type of home loan that is available to Arizona borrowers with a low FICO score. Learn all the details of subprime lending to determine the right loan for your unique credit situation.

Many potential homeowners with low FICO scores find themselves denied by banks when they try to qualify for a mortgage. Nearly 1 in 4 Americans have a FICO score of less than 640 which is considered to be a subprime credit score. With a subprime score it can be difficult to qualify for a traditional home loan. However, there are other options available for a Arizona subprime mortgage . Certain loan types and programs can help borrowers with low credit scores qualify for a home loan.

One type of loan available to borrower with bad credit is a Arizona subprime mortgage . A subprime loan refers to a loan given to a borrower that represents a greater financial risk due to his/her credit score. A subprime loan is funded by a bank but does not have to meet the same underwriting guidelines as a prime loan. Subprime loans allow access to groups that would normally not have access to the credit market like people with low FICO scores. The most popular type of subprime loan is an adjustable rate mortgage or ARM. In an ARM, the initial interest rate is usually low but then adjusts after a period of time to above the prime rate. The low interest rate is usually locked in for anywhere from 2-5 years and can be as low as 2.5%. After the lock in period, the rate adjusts and can be as high as 10%. An ARM is a good option for borrowers who know they will have the credit to refinance to a traditional loan after the adjustable period or for borrowers who only intend to live in the home for a short period and sell the property before the rate adjusts.

Another loan type that is available for subprime borrowers is a bad credit FHA loan. An FHA loan is backed by the Federal Housing Authority 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 sum of money for a down payment. In addition, the government backing means that you will be more likely to qualify, even with less than perfect credit. This is because the government helps secure the loan for the bank in case of default. One important note is that you will pay monthly insurance on your loan. In additional to you principle and interest payments, you will also pay a PMI insurance payment. This is basically extra money you pay to help insure against default. PMI payments can range from $80 to over $200 each month, depending on the amount of the loan. Make sure that you budget for this amount when calculating your monthly payments. Also, this may decrease the overall amount you can qualify for because it increases your monthly payment amount.


Although a subprime mortgage can be a valuable tool in helping secure a home loan, many borrowers shy away from them due to recent negative press. Specifically, in Arizona, many politicians have gone as far as to label subprime mortgages as predatory lending practices. They claim that subprime loans are designed to charge high interest rates for people who cannot afford them.  Proponents of subprime mortgage Arizona programs claim that subprime loans allow individuals access into the home marker who would otherwise be shut out due to credit history.

Despite claims by politicians and loan reform groups, there is little evidence that subprime lending is a predatory practice. Subprime lending is one of the only ways some individuals have access to the home market due to a bad credit score. Knowing the options available and working with a mortgage broker can help you decide if a subprime loan is a sound financial decision for you.
  
A mortgage broker can help you find the right loan for you, even if you have bad credit.
If your credit score is less than 640, you will most likely be denied by large banks. But don’t lose hope. A broker can help you find a loan that you can qualify for and start you on the path to homeownership. Making on time payments can help re-build your credit so that you can have an easier time securing loans in the future.

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 Bad Credit Mortgage Arizona: Hard Money Lending

There are a variety of circumstances that can lead to a low credit score. Learn how you can get a bad credit mortgage Arizona and qualify for a home loan, even if your credit is less than perfect.

Bad credit can make you feel like a failure. 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 Inc. show that 25% of the 170 million 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 42.5 million Americans with a low credit score, you probably assume that homeownership is beyond your reach. However, with new bad credit mortgage Arizona programs as well as federal programs, borrowers can qualify with low FICO scores.

As with any mortgage it is important to analyze the risks and benefits of a low credit mortgage. Once you have decided to stop letting your FICO score hold you back, it is important to know your options. Most likely you will not qualify for a bad credit mortgage through a bank, so it is important to find a reputable mortgage broker. A broker has more flexibility in terms of types of loans that can be offered so you are more likely to qualify via a broker than a bank.

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 bad credit mortgage Arizona 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 Money Loan?


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 secured by a mortgage broker but backed by an investor or group of investors instead of a bank. The loan is for a short period of time, usually a few months to about 4 years. The goal of the loan is a true investment, for everyone involved to make money.
In order to secure a hard money loan, you need to work with a mortgage broker. 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.

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.

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 bad credit mortgage Arizona 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 first 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 




Tuesday, February 3, 2015

Home Values Are Going Up BUT NOT TOO FAST!

Where is the Real Estate Market Trending or Heading? 

Ok.. were back. Values are sky rocketing and prices are increase at a trend rate that is almost straight up!
The (Im going to get technical here with math) slope of the trend graph for some of the major metro area like Tampa, Los Angles, San Diego and Phoenix is very large number. This growth straight up! Get ready, for lotteries, lines and no homes. Of course you must have been sleeping if you are in the industry have not seen this yet
To look forward, we must look at where we were in the past. See the following graph.  (For a high resolution PDF version click here.)

It appears from the graph of Phoenix House Values below, that the real estate market in the Phoenix area is heading up.   Is it time to buy real estate again?  How long will it take to come back to normal?  Should I get out of the market and wait?  These are hard questions to answer but here are Big Daddy Dennis’s predictions and recommendations:
ü  Home values will not return to the trend line for another 1-2 years. Latest trend shows Phoenix back to the highs starting July 2015!
ü  The upturn in values are due to LACK OF INVENTORY AND RECORD LOW INTEREST RATES.
ü  Keep your home if possible.  Do whatever it takes to keep the current home. 
ü  Do a loan modification?  Its possible but there are very few who are successful. 
ü  If you ‘bail out’ and let the bank foreclose, you will not be able to purchase a home for 5-7 years, maybe even never again!
ü  Inflation will come back and the value of the dollar will drop dramatically.  (This could change if the USA will cut spending and raise taxes, cut medical/social security, and increase the tax rate by 45%. I don't think this will happen.)
ü  The amount of debt in the USA will continue to grow. The amount is very frightening to view it click here.
ü  In 5-7 years, it will cost $10 to buy a loaf of bread.  Gasoline will cost $25/gallon. And the average starter home price will be $600,000.
ü  Get out of debt; get rid of the credit cards and pay them off.  Purchase only if you have the cash.  Do not get into any debt.  (I sound like your mother here, but she was correct.)
ü  Start a side business.  It’s too difficult to explain here why, but the best reason is the potential tax advantage and the possible income.  Your own side business is the LAST area the government has yet to attack.  Make it simple and get going.  An extra $400 per month really helps.
ü  If you are able, purchase quality single family homes in a good area and turn them into rental units. (Your side business?)

I’ve talked to a lot of people who feel that they can ‘let their home go and rent for awhile’.  Rental rates are lower than their mortgage rates. Yes, they are!  We can save a lot of money by renting vs. paying the mortgage, and in 2 years we can purchase again and have a good down payment.’  Well, it’s actually going to be 5-7 years before your credit report looks good to purchase a home again.  And can you really save the money?  Most people will spend the money on toys.  If hyper inflation hits, like some economist predict, then you’ll be priced out of the market. Do you want to take the chance?  Keep your home, do a HARP 2 loan modification, and hang on – the next 5-7 years are going to be enjoyable.

With low inventory and too many buyers, the Phoenix Real Estate Market is on the verge of a new boom in real estate values.

With low inventory and too many buyers the Phoenix Real Estate Market is on the verge of a new boom in real estate values.
'This boom is going to be different,' according to Dennis Dahlberg, Level 4 Funding   Hard Money Lender . 'The last boom was fueled on greed of the consumer; this time it's going to be a supply problem. Over the past 6 years there was little construction or movement of dirt, leaving the Phoenix housing market starving for new homes. Additionally, home values are raising dramatically, and once the current home owners get above water (have equity) they are going to want to move up. We're going to have a trifecta or the perfect storm-no homes, pent-up demand, and record low interest rates. And if you throw a little inflation on top of the mix -- watch out! Bam! its going to be a wild ride -- a wild west ride!
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


Monday, February 2, 2015

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 a bad credit mortgage Arizona. 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. For many individuals with bad credit, buying a home seems impossible. However, many mortgage brokers offer bad credit mortgage Arizona programs to help Arizona residents qualify for home loans.

One type of loan that is available for people with bad credit is an adjustable rate mortgage or ARM. An ARM is offered to subprime borrowers who would not qualify for a traditional loan. It offers a low interest rate at first but then resets to a high interest rate after a specified period, usually 1 to 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 bad credit mortgage Arizona, it can also be beneficial for borrowers with good credit.

A second 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.
 A third type of bad credit mortgage Arizona that is available is a hard money loan. A hard money loan is secured through a mortgage broker but is backed by investors instead of a bank. This is especially beneficial for people looking to do a fix and flip or short term purchase. Depending on the merit of the property you are purchasing as well as potential for income, investors will often invest capital, even if your credit score is lower than what is ideal. It should be noted that hard money loans are short term loans only. They cannot be used to purchase a home you plan to live in for any significant amount of time. These are designed primarily for real estate investors.


For some borrowers, a bad credit mortgage Arizona  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 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.

2.       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.

3.       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.

4.       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.

5.       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.

Talk with a 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.

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

Stated Income Mortgage in Arizona

A stated income mortgage can be a helpful tool in qualifying for a mortgage if you are self-employed or have income that is difficult to verify. Learn what a stated income mortgage is and see if one is a good fit for your home loan needs.

In a traditional mortgage qualification process, the borrower is asked to provide a variety of documentation. Key among these documents are income verification documents. These include W-2s, tax returns for two years, pay stubs, and bank statements. Any additional deposits into a bank account that cannot be verified by paystubs must also be accounted for. Basically the financial assets of the borrower are gone over with a fine tooth comb. This system works well for people who hold traditional jobs with stable income. However, for borrowers who are self-employed, investors, or have a different non-traditional income situation, income verification can be almost impossible.
For borrowers who are unable to furnish proof of income, earn money in a non-traditional way, or who may have a higher than permissible debt to income ratio, a Arizona stated income mortgage can be a solution. A stated income mortgage is a home loan where the lender does not verify the borrower’s income via W-2’s or tax returns. The borrower is asked to state their income and then taken at their word.

Stated income mortgages have been given a bit of a bad reputation because they are easy to use to commit fraud. One less than flattering nickname for the loans is “liar’s loans.” This nickname came about because a study of IRS tax records found that in nearly 60% of all stated income mortgages the borrower actually made less than he/she declared as income to obtain the loan. Some politicians are trying to limit access to stated income loans based on the assertion that they could be used for fraudulent purposes.

When Does a Stated Income Mortgage Make Sense?


Despite its less than flattering nickname and somewhat checkered past, there are certain situations when a stated income mortgage is the best home loan option. For many borrowers this type of home loan is the only loan that will give them the capital they need to buy the home they can afford. There are a few situations where a stated income mortgage makes sense.

The first case in which a stated income mortgage is a smart choice is self-employment. This is actually the income situation that the mortgage type was designed for. For many small business owners, independent contractors, consultants, and other self-employed business people, it can be difficult to furnish proof of income to the bank’s satisfaction. Income sources may be considered unstable or there may simply not be a traditional W-2 or pay stub that can be provided. A stated income mortgage allows the business owner to state his/her income and qualify for a mortgage based on that statement.

Another case in which a stated income mortgage is a good option, is for someone who makes his or her living from investments. Take a real estate investor who owns multiple properties all with loans. Even if this investor makes $100,000 a year in disposable income and has the mortgage on each property covered by rent, his/her debt to income ratio might be too high on paper to be given an additional home loan. A stated income mortgage accounts for the actual disposable income this individual has to spend each month, rather than just what the financial situation looks like on paper.
A third situation that would benefit from a Arizona stated income mortgage would be in the case of a freelancer or consultant. People who are employed in these fields generally tend to work for more than one company. Their work is also often seasonal or may vary from month to month. During the mortgage qualification process, banks look at 2 months of pay stubs. If it is a slow month, the amount of pay may not reflect the actual amount that borrower earned and therefore he/she may not qualify for a high enough amount, if at all. In addition, banks require that a borrower works for a company for a year or more before that income source is considered valid. A freelancer or consultant often works for many different companies but only one or two on a permanent basis. Therefore the actual income of the borrower could be $200,000 but only $50,000 is counted as income by the bank. A stated income mortgage allows the borrower to use their actual income amount to qualify for a mortgage.


Most traditional banks do not offer Arizona stated income mortgages as they are considered higher risk loans. Brokerage firms and smaller banks often have programs that will work with borrowers who need a stated income mortgage.

Level 4 Funding LLC
Dennis Dahlberg, Broker/RI/CEO
NMLS 1058389 AZMB 0923961
23335 N 18th Drive Suite 120
Phoenix AZ 85027
623-582-4444