Texas 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 Texas 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 Texas 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 Texas 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 Texas 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

Bad Credit and Texas Real Estate: How to Qualify for a Subprime Mortgage Texas

A Texas subprime mortgage allows borrowers with bad credit to purchase real estate in the Loan Star State. Knowing the types of mortgages available will help you choose the right mortgage product and save you money.

With great weather, a stable economy, and a real estate market with great deals, it is no wonder that so many people want to move to Texas. With some parts of the state getting over 300 days of sunshine each year and skiing in the northern part of the state, it is the perfect place people with any climate preference. The relatively low humidity also makes it ideal for people with respiratory problems and mild winters are great for snow birds. If you find yourself dreaming of moving to Texas, but have bad credit, you will want to start researching Texas sub prime mortgage  to learn about the different types of mortgages available in the state for borrowers with bad credit or high debt to income ratios. If you cannot qualify for a traditional mortgage due to a low credit score, a subprime mortgage might be a good option.

A subprime mortgage is a loan given to a borrower who is considered to be a higher risk due to a poor credit score. Typically a sub prime borrower has a credit score of less than 640, but this does vary. Since the lender is assuming a higher risk, the interest rate is also generally higher. Critics of subprime lending argue that it charges unfair interest rates and further burdens individuals with low incomes and high amounts of debt. However, for many individuals, a subprime mortgage, Texas is the only way they can qualify for a home loan. There are several types of subprime mortgages available and each type has different advantages and risks. 

Although subprime mortgages generally charger higher interest rates, for almost 42.5 million Americans, it is the only home loan they can qualify for due to a low credit score. If you find yourself having trouble obtaining a home loan in Arizona based on your credit, do your research on subprime mortgage Texas to determine the type of loan programs you may be able to qualify for. Knowing the different types of subprime mortgages can help you select the right product for you and your family.

Types of Mortgages Available to Borrowers with Bad Credit

One type of mortgage available to subprime borrowers is what is known as an adjustable rate mortgage or ARM. An ARM starts off at a low interest rate, usually lower than the prime rate around 2-3 percent. After a period of time from 1 to 5 years, the rate then adjusts to a much higher rate anywhere from 10 to 20 percent, depending on market conditions. This will cause your payment to go up rapidly. ARMs got a bad reputation during the housing crisis of the mid 2000s and were accused of being a way for banks to loan money to and take advantage of subprime borrowers. Many people lost their home due to the inability to make the new, higher payments after the rate adjusted. An ARM can be a good option if you are in the process of rebuilding your credit and will be able to refinance to a traditional loan before your rate adjusts. It is also a good option if you are buying a short term home to either fix and flip, or you plan on moving within the low rate period. An ARM is also a good option as long as you budget accordingly so you do not get priced out of your home and wind up unable to pay your mortgage.

A second, less common type of subprime loan is a hard money loan. A hard money loan is offered by a group of investors, rather than a bank. It is a short term loan that is designed primarily for fix and flip houses. Since investors are offering the loan, not a bank, they are more likely to give loans to borrowers with low credit, providing they have a sound real estate investment. Hard money loans are usually short term loans and last for a couple years. A hard money loan is a good investment but not if you are planning on living in the home for any amount of time.

Another program that is available to low credit borrowers is an FHA loan. This type of loan is backed by the federal government and offers low interest rates and low down payment options. Most FHA loans only require a 3.5% down payment which makes it a great option for borrowers without a large amount of liquid cash assets. This is also a great option for someone buying a second home who may not have the down payment they would have if they sold their first home. The loan is insured by the government so the borrower will end up paying what is called primary mortgage insurance or PMI payments. PMI payments can range from anywhere between 80 and a few hundred dollars so it does increase your monthly mortgage payment. You will make these payments until you have paid off 20% of your home loan.

Deciding on the right loan product is essential to making your sub prime borrowing experience positive.

Talk with a mortgage broker to further discuss your loan options. You may also qualify for certain federal programs that offer down payment assistance or cash back at closing. Some of these include the Home in 5 program or the Home Affordable Refinance Program (HARP). Call a Texas mortgage broker to help get you started on your move to the Loan Star State. 

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

Texas Bad Credit Mortgage Lenders: Risk Less With a Qualified Lender

If you have bad credit and want to purchase a home, you will find yourself looking for Texas bad credit home mortgage lenders and banks that specialize in bad credit loans. There are a number of types of lenders as well as loans that can help individuals and families find the right home loan. With every loan product there is some risk but finding the right lender can help minimize investment risks.

If you have bad credit and want to buy a home, you may think it is an impossible goal. Bad credit can make you feel isolated and alone. A FICO score of less than 620 gives you a label of a “sub-prime” borrower with rotten credit. Banks and credit companies may label you as “irresponsible” or “too risky” of an investment. Although this may make you feel alone, rest assured that there are many Americans in the same position as you. The average credit score in the United States is 640, meaning that most borrowers have less than perfect credit. In addition, nearly one quarter of all credit using Americans are classified as sub-prime borrowers. If you have bad credit, it is possible to secure a home loan, you just have to find the right lender.

With many Americans falling into the “fair” or “poor” credit classifications, there are many Texas bad credit home mortgage lenders that can help sub-prime borrowers secure a home loan to purchase a residence or investment property. If you are searching for a bad credit home loan, it is important to know all of your options as far as lender types and institutions. If you have bad credit, you may end up paying higher interest rates and could end up with a more risky loan type. It is important to find a lender you trust to help minimize the risk associated with many bad credit loans.

Types of Texas Home Loan Lenders to Help Make You Home ownership Dreams Come True

The most common type of lender is a traditional bank. A bank gives mortgages loans and uses its own criteria along with federal guidelines to determine if a borrower has the FICO score and debt to income ratio necessary to qualify for a home loan. The bank uses market conditions to set interest rates and only offers their own interest rates and loans. Although a bank does have some options for bad credit borrowers, it is usually the entity that turns down sub-prime borrowers. It is not ideal as far as Texas bad credit mortgage lenders go because it has strict guidelines regarding credit scores as well as income qualifications.

Another common type of lender is a Texas Mortgage Broker. A mortgage broker is an individual or firm who operates under a state license to help individuals qualify for home mortgages. Like a bank, you can get multiple loan types but, a mortgage broker is not locked into one interest rate or one lender. The broker or broker company will basically shop loans for the borrower to find the best interest rate and loan terms based on current market conditions. In addition, a mortgage broker can find loans that banks may not be able to give because the borrower or loan type is too “risky” for a traditional lending institution. This makes a mortgage broker a better choice for borrowers with bad credit.

A less common type of lender is a private investment firm. These private investment firms are run by a licensed broker who is up to date on mortgage and real estate laws, programs, and terms. The loans are funded by private investors rather than a bank. As a group of private investors, these types of lenders are more likely to look at the merit of the property as well as the potential to make money as compared to exclusively the credit score of the borrower. This makes them a good option for Texas bad credit mortgage lenders. One example of a private mortgage investor is a company like Level 4 Funding which is run by a licensed financial professional. This is an important characteristic to look for to make sure that you are working with a legitimate firm that will help minimize your financial risk. If you want to look into private mortgage investors, a mortgage broker can help you find a good company, but most likely you will have to ask for it. In addition, you can ask an investment banker or realtor to point you in the right direction.

Texas Bad Credit Home Mortgage Lenders Are the Real Deal

The bank is not the only place to get a home loan. If you have been turned away by a bank due to bad credit, there are other options. Make sure to do your homework and thoroughly check credentials but once you find a lender you can trust, they can help you find many different options to lead you to homeownership. 

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

5 Things You Need to Know About a Texas Bridge Loan

A Texas bridge loan is a special type of short term loan that can help you buy a new home. It is important that you know your options and fully understand the terms of your loan to make an informed decision.

A Arizona bridge loan is a specialized short term loan that can be useful for real estate transactions. It is a short term loan that allows you to use the equity in your current home as a down payment on a new home before your current home sells. As the name implies, a Texas bridge loan is designed to “bridge” the gap by giving you funds for a down payment. The loan is paid back with the proceeds from you home sale.

A bridge loan can be very beneficial in many ways because it allows you to buy a new home and put yours on the market without any restrictions. When you are living in a home while you are trying to sell it, scheduling showings can be a nightmare, especially if you have pets or kids. It is also difficult to keep your home show ready and leave at a moment’s notice. Many buyers will also have trouble picturing themselves in your home while your stuff is there. A bridge loan can allow you buy another home while yours is still on the market by fronting you the down payment.

An additional benefit of a bridge loan is that it is relatively easy to qualify for. There is not a lot of paperwork and since many borrowers will have a high debt to income ratio because they own two homes for a short period of time, debt and credit scores are not as important as they are in traditional loans.

Important Things to Consider when Thinking About a Texas Bridge Loan

If a Texas bridge loan sounds like it might be a good option for you, it is important to know all of the risks and benefits and know the ins and outs of your loan terms. Make sure you are in the driver’s seat and in control of your loan at all times. Here are a few things to keep in mind.

1.       A Arizona bridge loan may have a high interest rate. Since a bridge loan is a short term loan and is secured by the sale of your current home, the lender is taking a fairly significant risk in extending you the credit. The more risky the loan, the higher the interest rate. Although interest rates do fluctuate, you can expect to pay more than the prime rate and your rate could climb as high as the double digits.

2.       You can avoid paying interest. Although the loan itself has a high interest rate, shopping around for the right loan can help you avoid paying any interest at all. Many bridge loans allow you to skip the first few months of payments. If you can sell your home during this time period, you can pay the loan back before any interest accrues.

3.       There will be fees. A Arizona bridge loan has several fees associated with it. You will pay an administration fee of about $750 and an appraisal fee on your current home to ensure it is worth what you need to sell it for. In addition, you will pay wire fees, origination fees, and points which will be dependent on the amount of your loan. When all is said and done you will probably end up paying about $2,000 to secure your bridge loan. For most borrowers this is well worth it to get them into their new home sooner rather than later. Also, keep in mind that the fees will vary depending on your lender so shop around.

4.       A bridge loan can cause stress. If your current home does not sell quickly, you will end up paying the mortgage on it, the mortgage on your new home, and the payment on your bridge loan. Make sure to carefully evaluate your finances to ensure that you can make your payments for a short time if you need to. You can also help eliminate financial stress by pricing your current home to sell quickly.

5.       A bridge loan can save you money. If you wait to purchase your new home until your old home sells, you may end up needing a short term rental. This is literally throwing money down the drain. Getting the right Texas bridge loan and selling your current home quickly can actually save you quite a bit of money.

If a Arizona bridge loan sounds like a good option for you, start looking at your options today!

A Texas mortgage broker or private lender can help you get started on getting your bridge loan. Call our office today to schedule an appointment. You will be glad you did!

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

  

Types of Bad Credit Mortgage Texas: Hard Money Lending

There are a variety of circumstances that can lead to a low credit score. Learn how you can get a bad credit mortgage Arizona and qualify for a home loan, even if your credit is less than perfect.

Bad credit can make you feel like a failure. Many Americans who have bad credit report feeling alone, miserable, and almost hopeless. There is a false picture of a person with bad credit that paints him as irresponsible, reckless, and even as a thief. This could not be further from the truth. There are a variety of factors that can lead to a lower credit score. Job loss, divorce, a sudden change in income, or even an old credit card you forgot about can cause your credit score to suffer. Recent statistics released from FICO Inc. show that 25% of the 170 million Americans with active credit accounts have a FICO score of less than 600. This is considered a low credit score and if you have a low score, you can have trouble getting credit cards, car loans, and even store credit accounts.

If you are one of the 42.5 million Americans with a low credit score, you probably assume that homeownership is beyond your reach. However, with new bad credit mortgage Arizona programs as well as federal programs, borrowers can qualify with low FICO scores.

As with any mortgage it is important to analyze the risks and benefits of a low credit mortgage. Once you have decided to stop letting your FICO score hold you back, it is important to know your options. Most likely you will not qualify for a bad credit mortgage through a bank, so it is important to find a reputable mortgage broker. A broker has more flexibility in terms of types of loans that can be offered so you are more likely to qualify via a broker than a bank.

There are many types of bad credit mortgages that are offered in Arizona. Many people know about adjustable rate mortgages and FHA loans that are designed for long term homeownership. However, there is a less well known bad credit mortgage Texas called a hard money loan. Rather than the goal being long term homeownership, a hard money loan is designed to be an investment strategy to help borrowers with bad credit make smart real estate investments and turn large profits.

What is a Hard Money Loan?

For many people with bad credit, they assume that real estate investing is out of their reach because a bank will not lend them money for a mortgage. A hard money loan is a type of loan that is designed specifically for real estate investments. It is secured by a mortgage broker but backed by an investor or group of investors instead of a bank. The loan is for a short period of time, usually a few months to about 4 years. The goal of the loan is a true investment, for everyone involved to make money.

In order to secure a hard money loan, you need to work with a mortgage broker. You would determine a property that you wish to purchase that is a sound investment. Typically these are fix and flip type houses that can build equity quickly. Once you have a property in mind, your broker will connect with a hard money investor or investment team. The investors will examine the merit of the property and the money making potential. They will use this information to determine whether or not they want to invest their capital.

Since a hard money loan is backed by investors, they are more likely to give loans to individuals with bad credit. Instead of only looking at numbers, the investors look at the potential for the property to make money and don’t focus solely on the credit score of the borrower. Once the borrower has renovated the property and sells it, the investors make back their money plus a certain amount of interest. The borrower also makes money on the investment so it is a win/win situation.

If a hard money loan sounds like a good investment for you, talk with a mortgage broker.

A hard money loan is a special type of bad credit mortgage Arizona in that it allows individuals with bad credit to make real estate investments. These investments can have high returns and have great money making potential. If you have bad credit but want to invest in real estate, a hard money loan might be a good option for you. Talk with a mortgage broker today to help you secure your first loan.

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