Bad Credit Home Loans Arizona: How to Make Money Investing in Real Estate Using Hard Money Loans

If you have bad credit you most likely think that real estate investing is impossible. However, with bad credit home loans Arizona and hard money lending there are options for individuals with bad credit to take advantage of real estate investment opportunities.

Most financial experts will tell you that real estate is a sound investment. Real estate has consistently earned money over time and is a way to help build your investment portfolio and personal wealth. However, for many individuals with bad credit, real estate investing has been beyond their reach using traditional loans. Approximately 42.5 million Americans have a bad credit score and are considered sub-prime borrowers. If you are in the market to start real estate investing but you have bad credit, there are a variety of bad credit home loans Arizona mortgage brokers recommend.

One type of loan available to sub-prime borrowers is a hard money loan. A hard money loan is a specialized type of real estate backed loan. The lender is an investor or group of investors rather than a bank. 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 and 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 bad credit home loans Arizona mortgage brokers recommend 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 Regulations

Although hard money loans have significantly less regulations than traditional mortgages, there are certain federal regulations that apply to hard money lenders. For most property types, hard money lenders do not require the same income verification or credit score guidelines that traditional banks do. This is part of what makes them ideal bad credit home loans Arizona residents with bad credit can use, as they look at the value of the property from an investment standpoint, not based on credit or income. However, it is important to note that hard money loans are more risky for the lender and therefore come with a higher interest rates. In addition, if you are taking out a hard money loan on a residential property, you will be required to some proof of ability to repay the debt. This means some type of proof of income though it is usually less stringent than what a bank requires. 

When you take out a hard money loan, the property that you are investing in becomes the collateral. If you default on the loan, the lender will seize the property to protect its investment. If you take out a hard money loan, make sure that you will be able to pay the loan back in full at the end of the term by either selling the property or other means. When you sell the property you keep any money that is earned above the amount of the loan and any accrued interest. 

Talk with a mortgage broker or investment company about hard money lending.

A financial professional or mortgage broker can help you decide if a hard money loan is a smart financial choice. It is a great way for Americans with bad credit scores to start taking advantage of real estate investing. In addition, hard money loans can benefit prime borrowers as well. If you already own a home you may not qualify to purchase an investment property based on your debt to income ratio. A hard money loan can be a great work around to get you into the real estate market. Call a broker or your financial adviser to learn more today.

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
www.Level4Funding.com

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

Arizona Home Loans: How to Buy a House with Bad Credit

 If you have bad credit you may find it difficult to buy a home. By being proactive and taking certain steps to repair your credit, you can find Arizona home loans that will help make your dreams come true.

Bad credit can make getting a car loan, credit card, and even a job difficult. Although you may feel isolated, you are far from alone. According to recent statistics released by FICO Inc., the average credit score is about 670 which is considered a “fair” score. In addition, nearly one quarter of all credit using Americans have poor credit. So, although you may feel alone, there are nearly 42 million Americans who are in the same boat as you. Bad credit can also become a vicious cycle. You need to repair your credit by making on time payments, not one will give you the opportunity to make on time payments so you bad credit stays bad. You may begin to feel that the situation is hopeless.

One way to help rebuild your credit is by purchasing a home and making on time mortgage payments. If you have bad there are a variety of ways and programs to help borrowers with bad credit get Arizona home loans. Since the housing crisis of 2008 there has been a rumor that only borrowers with perfect credit can be approved for home loans. However, with banks and lenders relaxing their credit requirements, more home loans are being approved at lower borrower credit scores. Some programs will even approve borrowers with a score as low as 500 as long as the borrower has some cash for a down payment.

If you have bad credit and are thinking about applying for Arizona home loans, there are a few steps you can take to help make sure that you will qualify. First, make all of your rent payments on time. 12 months of on time rent payments can help when a lender is trying to decide if you are worth the risk in terms of a mortgage investment. In addition, start saving cash. Money talks, usually louder than credit alone. Having 6 months to a year of living expenses in the bank (including mortgage payments) will make it more likely that a lender will finance your mortgage. In addition, save up for a down payment. 

Types of Arizona Home Loans Available to Borrowers with Bad Credit

 

The type of loan that you will be able to qualify for depends on how low your credit score is. If you have a score of 650 or higher, you have a possibility to qualify for a traditional loan. A traditional loan is a fixed 15 to 30 year loan with payments that will remain roughly the same for the entire loan term. Payments may fluctuate slightly based on property tax amounts but they principal and interest will remain the same. In order to qualify for a traditional loan you will need to put between 5 and 20 percent of the loan amount down.

If your credit score is less than 650, you can still find Arizona home loans that you can qualify for. One of the main types of loans that can help sub-prime borrowers is an FHA loan. An FHA loan is a loan that is secured by the federal government. You will pay a fixed rate for principal and interest for a 15 to 30 year loan term. You will also pay mortgage insurance in the amount of 80 to 200 dollars each month, depending on the amount of your loan. You can qualify for an FHA loan with a credit score as low as 500 as long as you have between 3.5 and 10 percent of the loan value to put down.

If your credit is less than 500 or you don’t have the cash for a down payment or can’t be approved for other reasons, you might want to look into some less common mortgage programs like rent to own, seller financing, or having a cosigner. Just keep in mind that all of these programs do have some inherent risk and you should make sure you are well informed about the loan type going into it. 

Find a mortgage broker to lend a helping hand.

 

A broker can help you start your home ownership journey. Call one today and stop letting bad credit define your home ownership goals.

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
www.Level4Funding.com

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

Arizona mortgages for bad credit: How to Make Money Using Adjustable Rate Mortgages 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 about 25% of all adults with active credit accounts. Bad credit is a FICO 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 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 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 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 loan 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.

In addition to these three loan types there are a variety of other types of loans offered by private lenders, hedge funds, and equity funds. For these loans the terms will vary significantly by the lender. Interest rates can be anywhere between 6 and 9 percent and you will need to have a down payment of up to 20% as well as proof of income. The requirements for these loans an usually much less stringent than bank loans and the lenders are usually willing to consider extraneous factors and reasons for bad credit.

When Does a Arizona Bad Credit Mortgage Make Good Financial Sense?

For some borrowers, an Arizona 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 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 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

How to Use Arizona Bridge Loans When You Are Buying and Selling a House

When you are needing to move, buying a new home while selling your existing home can be a stressful and complicated process. Often you need to sell your current home to finance the down payment on your new home. Short term Arizona bridge loans can be a valuable took to ensure you are able to buy the home you want and sell yours more easily.

                When you buy your first home, you probably don’t think too much about the timing other than issues like no one wants to move in the summer or when your lease is up at your current rental. However, once you are looking to upgrade from your starter home to something larger, timing become essential. Most buyers need to use funds from their current home to fund the down payment on their new home. In an ideal world, you would be able to close on your home in the morning and close on your new home the afternoon of the same day. This sounds ideal but it rarely happens. Due to market conditions and the stress of showing a home, trying to sell and buy at the same time can seem almost impossible.

                You may find yourself stuck between a rock and a hard place. Although you can qualify for both home loans, you can’t produce a down payment for the new home without selling your existing home. Your home may not be getting any offers because a lived in home does not show as well as a vacant or staged home, but you need somewhere to live until you can purchase a new home. Arizona Bridge loans are a specialized type of short term loan that can help.

                Arizona Bridge loans are short term loans meant to help bridge the gap between selling your home and buying a new property. A bridge loan is a short term loan that you can get in addition to a home mortgage to cover the down payment. You will make payments on the bridge loan until you sell your first property and can pay the loan back in full. The bridge loan is contingent on the equity in the home that you are selling. Arizona Bridge Loan have low debt to income ratios and no set amount of paperwork for closing. Rather than being based on a FICO score or income number, bridge loans are based on what makes sense for each financial situation.

               

Benefits of Arizona Bridge Loans

Bridge loans have several benefits for the borrower. Namely, they allow them to put their existing home on the market without being inconvenienced with appointments for showings. Because the owners have already purchased and moved into their new home the home on the market can be decluttered and staged for optimum showing. Staged homes sell more quickly and for higher dollar amounts that homes that are lived in during showings. If getting top dollar for your home is your goal, a bridge loan may help you move into your new home so that your existing home shows at its best.

Another benefit of a bridge loan is that many do not require payments for a couple months. Some mortgage brokers can get deals where you won’t make payments on a bridge loan for up to four months. If you are able to sell your home during that time you won’t ever have to make a monthly payment on the bridge loan as you can use the cash you get from selling your home to pay it off.

Bridge loans can also be helpful if you find “the one” before your home sells. You can always make a contingency offer, meaning that you will purchase the home when yours sells. However, if you are in a multiple offer situation or a seller’s market, having a contingency offer accepted can be tricky. A bridge loan gives you the cash you need to buy the home before your home sells

Risks of Arizona Bridge Loans

                Although there are many benefits of bridge loans, there are also some drawbacks and risks. First and foremost, it is important to keep in mind that bridge loans usually have higher interest rates and fees. Interest rates vary depending on market conditions. Talk with a mortgage broker to choose the best loan terms for your unique financial situation.

                In addition to bridge loan payments, keep in mind that you will also have to pay two mortgage payments until your other property sells. This can cause stress for some families if they are stretched too thin with payments. Pricing the home you are selling competitively can help make it sell faster and alleviate some of this stress. Also, you will need to be able to qualify for both home loans at the same time since you will be carrying both for a short period. This can be difficult for some borrowers. A mortgage broker can help find programs that will make this possible.

                If a bridge loan sounds like a good option for you, find a mortgage broker in Arizona to get started on the application process. 

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: 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
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