At Level 4 Funding, we believe there is no need to fret if you are in debt! New home loan borrowers can still obtain Arizona home loan or mortgages for bad credit or poor credit due to problems with debt. Debt should not be viewed as a scary thing, especially if you are buying a house. Like student loans, experts consider obtaining a mortgage as ‘good debt’. Good debt is considered an investment and something that can improve your credit. However good credit is only considered good if you are able to pay off a loan responsibility. To lenders, consistent and timely payments on a substantial loan give a positive impression of the borrower. It proves to financial institutions that the borrower has a dependable payment history. With a significant and positive credit history, the borrower has an easier time being approved for any type of loan, including a mortgage.

The problem is when the credit history is scarred from late payments or defaulted loans. Such negative marks that result in bad credit can come from both avoidable and unavoidable tragedies, such a maxed-out credit card or serious medical situation. Despite whether a subpar credit rating came from an irresponsible or a necessary decision, there is still hope for new home loan borrowers to obtain Arizona Home Loan if you have bad credit.

The difference between a low credit score and a bad credit score is difficult to define. This is because to some financial institutions, both situations are considered high risk. Therefore both low and bad credit scores are not favorable to lenders. Most likely individuals with low or bad credit score ratings will not be approved for a mortgage.

The breakdown of credit ratings is as follows:

According to the above list, if your credit score is below 650, you are considered to be a high-risk borrower. However exacting scoring may vary depending on the lender you are seeking a home loan from. For instance, a 640 may be the cut off point for what is considered poor credit. In any case, with a poor to bad credit rating, you most likely will not be approved for a typical mortgage from a banking institution. However you may consider other loan alternatives.

There are many options for new home purchasers with poor or bad credit history.  Lenders that accept bad credit ratings are often very flexible with your financial situation. As long as you have a good explanation for low score, offer proof of financial stability and have a significant down payment, you will likely be approved for alternative financing.

Speak to one of our friendly associates at Level 4 Funding, to learn more about our alternative finance options for bad credit. We will assess your individual financial circumstances and identify the right loan option for you. Don’t hesitate in purchasing your ideal home today! 

Dennis Dahlberg
Broker/RI/CEO/MLO