In Texas, it is a buyer’s real estate market. An increase in housing
inventory combined with low prices make now the perfect time to purchase a home
or investment property. Many sellers are willing to negotiate and buyers can
get great deals. In addition, interest rates are low and approval for lender
financing is up. The time to buy is now. However, if you have bad credit you
may not think it is feasible to purchase a home, especially if you would be
doing so as an investment property. This is simply not true. With a variety of
loan programs to purchase first homes as well as investment properties, you can
find a program that will work for you and your credit score.

One program you will want to consider, particularly for an investment
property, is an adjustable rate mortgage or ARM. An ARM is a loan that has a
fixed interest rate for 1 to 7 years. The rate is usually quite low, often
lower than the prime rate you would get with a traditional mortgage. This will
keep your monthly payments low and helps borrowers with higher debt to income
ratios or bad credit qualify. Keep in mind that once the loan term ends your
rate will go up and so will your monthly payment. An ARM is ideal for an
investment property that you are planning on owning for a short term, fixing
up, and flipping for a profit.

Another Texas mortgage loans program
you may qualify for, even with bad credit, is a hard money loan. A hard money
loan is not backed by a bank, but rather a group of investors. Since the loan
is not funded by the bank, the merit of the investment property is more
important than you credit score. Hard money loans are usually short term loans
designed to last from a few months to a few years. Be aware that you will
usually pay a higher interest rate with a hard money loan but if the investment
is worth it, this is negligible.

A third type of program that can help you qualify for an investment loan
with bad credit is an FHA loan. An FHA loan is a loan that is backed by the
federal government and you can qualify for the loan with a credit score of 580
and 3.5% of the purchase price down. If your credit is even lower, you can
actually still qualify for an FHA loan with a score as low as 500 but will need
to put about 10% down. The interest rate is fixed for the life of the loan so
your payment will not go up drastically. If you are looking at the home as more
of a rental investment (long term) than a short term fix and flip, an FHA loan
may be a good option for you.

Other less common types of Texas mortgage loans that can help borrowers with bad credit are rent to own
programs and seller financing. These are usually better options for a home that
will be your primary residence, rather than an investment property.

Finding a Texas Mortgage Broker is an important
first step in purchasing your investment property.

In order to purchase a
home with bad credit, it is important to have a mortgage broker that will work
for you. Ask your broker about his experience with investment loans as well as
bad credit loans. The more experience he has, the more likely he will
understand how and when to be aggressive with lenders to help fight for your
interests. Many borrowers with bad credit may be automatically turned down for
a loan by an automatic underwriting program based solely on their credit score.
An experienced broker knows how to get the underwriter to manually review the
application and take other factors, like income, investment potential, and
savings into account to help outweigh your bad credit.

Stop letting bad
credit keep your from investing in real estate. Find a broker today to start having
your money work for you.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 

Texas Tel:     (512) 516-1177 

www.Level4Funding.com