Low credit scores or high debt to income ratios often hold people back from buying their dream home. If you have bad credit, you can still qualify for a bad credit home loan in Arizona and make your dreams of home ownership a reality.

If you have bad credit, it can seem like you are alone. You might have trouble qualifying for a car

Although having bad credit may feel lonely, you are far from alone. According to a FICO survey, nearly 1 in 4 credit using Americans have a FICO score of less than 600. Basically there are over 42 million Americans with bad credit. As low credit scores are becoming increasingly common, a number of lenders offering bad credit home loans Arizona have been attracting borrowers with low credit scores. If you find yourself in the situation of having a low credit score, you probably think that owning a home is impossible. It is not. As long as you started to make smart financial decisions, getting a bad credit loan could be a great way to own a home and start to rebuild your credit history.

As with any type of loan, there are pros and cons to getting a bad credit loan. It is important to know and understand all of your options when it comes to types of loans you may qualify for. Below you will find an outline of a couple different types of loans that might work for you. Make sure that you also talk with a mortgage broker as programs and loan types change almost daily.

One type of bad credit home loans in Arizonathat 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 value 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. Most hard money loans only last a maximum of 24 months as they are mostly designed for short term real estate investments.

Another loan type that is available for people with bad credit is a type of FHA loan. An FHA loan is backed by the government (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 stellar credit. 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.

A third type of home loan that may be available as a bad credit home loans in Arizona is a subprime loan. 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.

Working with a mortgage broker will give you the most loan options as mortgage brokers can shop different banks and lenders to find the best deals and programs. A broker can also make sure you know all the options available to you so that you can make an informed decisions to buy a home and start rebuilding your credit history by making on time mortgage payments.

Level 4 Funding LLC

Dennis Dahlberg, Broker/RI/CEO

NMLS 1058389 AZMB 0923961

23335 N 18^th Drive Suite 120

Phoenix AZ 85027

623-582-4444