What do you do if your client has a bad credit score and wants to buy a home?

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What do you do if your client has a bad credit score and wants to buy a home?

As a Real Estate Agent, the obvious answer is to very politely ‘fire your client’ and put them on your Christmas Card List.

Hopefully they will solve their credit issues and you can show them homes in the future.

Don’t waste your time on this want-to-be buyer; they are never going to qualify for a loan. But wait; there is good news.

Recently there are a large amount of lenders who are now willing to take a risk on borrowers with bad credit.

When lenders consider a borrower’s loan application, the lender looks at:

ü Down Payment,

ü Ability to Pay and

ü Credit Score.

There are a lot of potential clients/borrowers who have a good down payment, and great income stream, but for some unknown reason their life is a mess and their credit is in the dumpster. (Bad credit is typically someone with a FICO score less than 580.)

Today there are Arizona Lenders who will lend to an Arizona borrower with bad credit if they have a substantial down payment and can make the payments.

Rates are going to be high, and the lender is going to be picky about the type of property and use of property.
Also there are some dead stop issues, such as outstanding judgments, tax liens or pending litigation. (In most cases judgments and tax liens are paid in escrow/closing.)

So if you have a client with bad credit, check to see if they have a large down payment, typically 30% and are free of any judgments and tax liens.

If they are, and can qualify for the payment, they can get the home they are dreaming about, and you can close the deal and we can get them the loan.

If not, ‘fire them, move one’ and don’t forget to say say Merry Christmas.

Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444

Texas Tel:     (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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