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 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