Private Hard Money Lender in California, Texas and Arizona: Arizona Home Loans: How to Qualify for a Home Loan Even if You Have Rotten Credit

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Wednesday, July 29, 2015

Arizona Home Loans: How to Qualify for a Home Loan Even if You Have Rotten Credit

If you have bad credit, you can still take advantage of various Arizona home loans products and programs to secure a home mortgage. You can also take certain steps to help clean up your credit to make you a more appealing borrower.

If you have bad credit, you may think that a home mortgage is beyond your reach. The truth is, if you score is 650 or higher you may be able to qualify for a traditional mortgage. If you have a lower FICO score or have been turned away by a bank for a home loan, there are still other lending professionals that will be able to find Arizona home loans that will make it possible for you to purchase a home, even if your credit is less than perfect.

The first and probably most important first step in purchasing a home is to find a qualified Arizona mortgage broker that you trust. A broker is different than a bank in that he can shop for different Arizona home loans that will fit your unique borrowing situation. He is not tied to a specific bank or interest rate and can often find investment groups and lending institutions that are more willing to take a risk on a bad credit borrower.

Once you have found your broker, he should be able to explain a variety of programs that are available for Arizona home loans. If you have good enough credit or a significant amount of cash for a down payment, he may discuss a traditional mortgage with you. He will also discuss various federal loan programs like an FHA loan. The benefit of these types of loans is that they are designed to help out borrowers who may be first time home buyers or have bad credit so the FICO cut off scores are often lower than traditional loans. In addition, there may be programs like “Home in Five” that offer cash back at closing to borrowers who qualify. FHA loans also have low down payments so there is less need to have a significant amount of cash in the bank.

If you do not meet the qualifications for a traditional mortgage or an FHA loan, there are still options that your broker can suggest. Sometimes it makes sense to obtain a loan through an investment group rather than a traditional lending institution like a bank. Investment groups have more leeway in who they qualify for loans and will often offer loans to borrowers with lower FICO scores. Be aware that you will often pay a higher interest rate for these loans because you represent a higher risk for the lenders. However, often this higher rate is worth it to invest in owning a home. Your broker should be able to explain all interest rates and fees, letting you know exactly how much the credit is going to cost you in the long run.

How to Rebuild Your Credit to Qualify for a Arizona Home Loan

If you are considering applying for a home mortgage, there are certain steps you can take now to help ensure that you are able to qualify for a loan. First and foremost, make all of your payments
on time. This is especially important for your rent payment. A year of on time rent payments can go a long way in convincing a lender that you will be able to repay a home loan. On time payments of rent, credit cards, student loans, and any other debt you may carry will also help to increase your credit score. A year of on time payments may be the difference between qualifying for a home loan or not.

In addition to rebuilding your credit, make sure that you are also saving money. The bottom line is that money talks, and often louder than a credit score. If you have a year of living expenses saved up this can often outweigh a bad FICO score in terms of loan qualification. Also, a large down payment can decrease your debt to income ratio and make you a more attractive borrower.

A final step to help ensure that you will qualify for the variety of Arizona home loan that are available is to get and keep a job. Having at least a year, if not more, of steady employment with the same employer makes you a much more attractive mortgage candidate. It demonstrates stability which is an attractive trait for mortgage lenders.

Stop letting bad credit hold you back for an Arizona Home Loan.

Find an Arizona mortgage broker to help you navigate the ins and outs of the home buying market today. Make your dream come true and become a homeowner today!

Dennis Dahlberg
Level 4 Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

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