Setabay Private Money Lender: February 2023

Tuesday, February 28, 2023

Buying a home with bad Credit? How do you Fix Your Credit Score?

By: Dennis Dahlberg

You want that Arizona Home Mortgage to purchase your dream home, but your credit score is low. Are you looking for a loan for borrowers with bad credit or poor credit? Your credit score indicates what the industry calls your willingness and ability to pay the debt. It's a probability ranking score on the probability of you defaulting on an Arizona Home Mortgage payment obligation in the next 90 days. Some think it is a credit score grade on your payment performance. The lender will examine your overall grade and see if you can pay the debt. If you have a failing credit grade (an F), the lender will assume you will fail again and not pay them back. It's an overall Grade Point Average on how you passed or failed on prior loan obligations. If you got an F on an Arizona Home Mortgage in the past, your Grade Point Average would go down. Think of it as when you were in school. Every year the school would give you a Grade Point Average for the year's work. Some people got a very high-Grade Point Average (all A's) and were the smart kids in school, while others got a few D's and F's on their report cards and had a lower Grade Point Average for the year. This school of credit never ends in your life, and you want to have the highest credit score Grade Point Average possible and keep it up throughout your life. So, how do you get a high credit score Grade Point Average? You do the same thing that you did in school. That is:

1. Take the Test over again and get a better grade. How do you do this? First, you pay back the people you owe money. Those items in the collection or past due need to be paid off and settled. Your past owing mortgage grade is currently an F, but you can make it a C+ if you pay off the debt.

2. Don't get any more F's on your work. This means you pay the Mortgages back and on time. You need to take it seriously, make the payments, and don't be late. Remember when you turned work in late in school, and the teacher deducted points for the work because you were late? It's the same in the credit school; don't be late for your work. Also, what grade were you given when you did not turn in the work? You would get an F. This is the same with paying Mortgages. When you DON'T PAY, you get an F, and your overall credit score Grade Point Average goes way down. Pay your Mortgages on time, and the whole will give you the best Grade Point Average.

3. Don't take on too many classes. If you take a safe load of classes, your workload is more manageable, and you can probably get an A in every class. But if you take on too many courses, you will not be able to get all the work done for all the classes. This is the same in the credit world. Don't take on too many Mortgages, and keep the balance owed on the Mortgage to around 30% of your available balance. The lender will look at your mortgage (class load) and wonder, are you never going to get the work done? You have maxed out all of your credit cards and want another one? The more Mortgages you take on (sign up for), the higher the chance that you will fail on one of them, and possibly the Mortgage you are now trying to get is the one you will fail on.

4. Get that bad score off your report. Usually, the quickest way to get a lousy grade off your report is to dispute the score (Whine to the teacher). Tell the credit bureaus that it's not your grade or that the grader who graded the test was wrong, used the wrong pencil, or used the wrong answer sheet to grade your work. If you can get an F off your report card, your overall score and Grade Point Average will go up. This is usually the first thing you can do to get a better Grade Point Average. You do this by disputing the bad items on your credit report for each credit bureau. If they believe you and you are able to get the score off your credit report, your Grade Point Average will go up. If credit bureaus don't believe you, work on steps 1-3 above.

The good part about the credit score Grade Point Average is it is an Average. It's calculated over time; time is your friend when calculating the Grade Point Average. Your overall score is based on the current work and the work you have done in the past, but usually, it's for the last 3-5 years, and if you have an F on your credit score report card, it will drop off in a few years. So if you keep your grades up, in a couple of years, your credit score Grade Point Average will start to improve, and eventually, you will have all A's and you can qualify for the Arizona Home Loan With Bad Credit.

Equal Housing Opportunity. This is not a Good Faith Estimate and this is not a Guarantee to lend and should not be considered as such. Costs, rates, estimates and terms can only be determined after completion of a full application. Actual payments will vary based on your individual situation and current rates. APR for loans vary from 7.99 - 29.5% and is based on Credit Score, Down Payment, LTV, Income. Mortgage rates could change daily. To get more accurate and personalized results, please call 623 582 4444 to talk to one of our licensed mortgage experts. Terms and conditions of all loan programs are subject to change without notice. Level 4 Funding LLC, 22601 N 19th Ave Suite 112, Phoenix AZ 85027, 623-582-4444 NMLS 1018071 AZMB 0923961 This e-mail is for the exclusive use of the intended recipients, and may contain privileged and confidential information. If you are not an intended recipient, please notify the sender, delete the e-mail from your computer and do not copy or disclose it to anyone else. Your receipt of this message is not intended to waive any applicable privilege. Neither this e-mail nor any attachment's establish a client relationship, constitute an electronic signature or provide consent to contract electronically, unless expressly so stated by Dennis Dahlberg RI/CEO, Level 4 Funding LLC, in the body of this e-mail or an attachment. To the extent this message includes any tax or legal advice this message is not intended or written by the sender to be used, and cannot be used, for legal or tax purposes or advice.

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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

How to Buy a House With Bad Credit

It's challenging to buy a house with bad credit. Of course, it helps to have a down payment.

Buying a house with bad credit in Arizona — or, more accurately, a low credit score — can be challenging, but it's not impossible.

Purchasing a home requires having money for a down payment, a solid history of paying your bills over at least the past year or two and a steady income. You'll also need to meet the lender's minimum credit score requirements. While higher credit scores earn more favorable loan terms, it's still possible to buy a home with bad credit in Arizona.

What is the lowest credit score to buy a house?

Credit scores from 500 to 579: Theoretically, you can qualify for a mortgage with a credit score as low as 500, but you'll be limited to a loan insured by the Federal Housing Administration. With a credit score from 500 to 579, you'll need a down payment of at least 10% for an FHA loan. In addition, the lender will want you to pay off any outstanding collections and judgments. For home loans for borrowers in Arizona with bad credit or poor credit, Apple Wood Funding would be an excellent source to call.

Credit scores from 580 to 619: You might qualify for an FHA loan with a down payment as low as 3.5%. Or, if you are eligible, you could qualify for a VA loan — a mortgage guaranteed by the Department of Veterans Affairs.

Credit scores of 620 to 699: Your mortgage opportunities increase. You may qualify for a conventional loan, which isn't backed by a government agency like the FHA or VA, with a minimum credit score of 620.

Credit scores of 700 and up Lenders are more willing to extend credit when you have a credit score from 700 to 739, and a score of 740 or higher will yield the lowest interest rates.

Knowing and improving your credit

As a potential homebuyer, it's important to reduce debt, accumulate as much cash as possible, and review your credit history. Knowing your creditworthiness is essential in buying a home with bad credit. To find out, examine your credit report and check your credit score.

The smart home for your credit

You can find your credit report in various places, including personal finance websites like Credit Karma, the financial institution where you bank, and the government-mandated website annualcreditreport.com.

Check your reports for errors. Look for incorrect accounts or anything else that doesn't accurately reflect your actual credit history. You can dispute mistakes or inaccuracies with the credit bureaus or the creditor reporting the information if you find errors or inaccuracies.

Clean up your credit history. For example, making on-time payments may help your credit score. And a better credit score can lift your chances of getting a more affordable home loan.

Your free credit reports won't include your credit scores. To see scores for mortgages, you can purchase a full report from myFICO.com or Credit Karma. The most economical approach is to sign up, download the first month's information, then cancel the service before the next billing cycle.

Saturday, February 25, 2023

Do you have bad credit or poor credit and want to buy a home?

Buying a house has become synonymous with "the American dream."

However, far too many prospective buyers have found that owning a home has many prerequisites. In addition to having enough money for a downpayment, one hurdle has proven problematic for many to overcome: learning how to buy a house with bad credit Arizona. Fortunately, a low credit score won't prevent a borrower from buying a home. While options may be more limited, buying a house with bad credit is possible if you know where to look and the appropriate steps.

What Do Mortgage Lenders Consider A Bad Credit Score?

Contrary to what many believe, today's mortgage lenders do not establish a good or bad credit score benchmark. Moreover, most mortgage lenders neglect to require a minimum credit score in return for their services. Instead, the quality of a credit score is entirely dependent on the cumulative data provided by three main credit bureaus: TransUnion, Equifax, and Experian.

Borrowers' credit reports for a Bad Credit Mortgage in Arizona largely depend on the information generated by these three credit bureaus. However, instead of relying on three independent reporting agencies for their knowledge, mortgage lenders will generally look to the cumulative FICO scores to determine how creditworthy a borrower is. A FICO Score is a three-digit number based on the information in the previously mentioned credit reports and indicates how likely a borrower is to repay their loan.

There are five primary credit score categories prospective homebuyers may fall under (according to FICO):

Poor: Less than 580
Fair: 580 – 669
Good: 670 – 739
Very Good: 740 – 799
Exceptional: 800 or more

According to the latest FICO scores, anything less than 670 is bad—or subprime. It should be noted, however, that mortgage lenders will consider more than a borrower's FICO Score. In particular, lenders will also consider the following:

The borrower's down payment
The amount of debt the borrower has
How much income does the borrower make
Whether or not the borrower has any debts in collections

Anyone interested in learning how to buy a house with Mortgage Loans for bad credit must first look into what today's lenders view as acceptable; only then will borrowers be able to take the next step..

Wednesday, February 22, 2023

What Are Arizona Private Money Loans

The average real estate investor relies on a steady flow of private money to supplement their respective deals, often in the form of a private money loan. But where can one find this endless stream of money? Not only are institutional loans lengthy and cumbersome, but they can also impede the progress of a residential redeveloper.

But the big question investors have is understanding how to find an Arizona private money lenders. And what is the best way to convince private money to lend you the capital you need? And how does private lender financing work?

Conversely, real estate investment capital can allow investors to grow their businesses steadily.

The following illustrates the most critical aspects of a private lender loan, which will prepare you for the private money process and boost your credibility with potential lenders.

How to Acquire a Private Lender Loan

Private lender loans are different from traditional loans from big banks, and the process of obtaining one will also be different.

Speed of Purchase: On average, a private lender can underwrite and fund a loan in as little as 7-21 days. Banks can take up to 90 days to accomplish the same thing. The timeframe offered by an Arizona private money lender is, more or less, conducive to the deals a typical investor wants to finance.

Asset-based Lending: Private lending is primarily driven by the underlying value of the subject property. Therefore, borrowers do not need to rely on their credit to secure a loan.

Control & Profitability: Borrowers receiving private money have more control over their loans. Borrowers of private money do not need to take on equity partners.

Shorter Term Loans: Private money loans typically have a shorter loan period than conventional ones, which reduces the risk of accruing late penalties.

Guarantee of Capital: Private money allows borrowers, independent investors in particular, to expand their business. A predictable source of funds is necessary for such an endeavor.

Understanding Private Loans

At the risk of sounding too cliché, money and experience are the most important aspects a private money investor needs to exhibit. Essentially, when it comes down to it, the most successful private lenders in Arizona have an increased propensity for the real estate industry and a proven track record of identifying powerful lending opportunities. Perhaps even more importantly, however, is their tendency to remain hyper-localized, as a working knowledge of a region is critical to success. Understanding a particular market, particularly its direction, is an invaluable asset.

Your Private Lending Business: Determining Deal Viability

Private lenders are in the business of making money. Therefore, mitigating risk is a top priority. There are eight factors to consider when deciding whether or not a potential loan opportunity is viable. They are as follows:

Market Value
Borrower Credit
Borrower Equity
Additional Collateral
Lien Priority
Pricing Strategy
Exit Strategy
Due Diligence

These factors must be considered when determining whether or not to pursue a loan opportunity. Failure to mind due diligence and neglect of either of these could result in harsh consequences. Due yourself a favor and navigate the process with precision.

Proper Documentation

Proper documentation of a private money loan is of the utmost importance. However, many may be unaware that the paperwork involved in an Arizona private money loan is not all that different from a conventional loan. Accordingly, the borrower in question must sign a promissory note (a written promise to repay the loan under specific terms) and a mortgage (documentation that will be used as collateral for the lender). In addition, residential loans may require an appraisal from an outside party: a property inspection report, a geology inspection, and the borrower's financial record. An in-person examination of the property is almost always part of the decision-making process, which is why most private money lenders tend to focus on a local level.

While a hard money lender's requirements may vary, standard documents are associated with every transaction. Typical loan documents include, but are not limited to:

Letter of Intent (LOI): The LOI is a formal document acknowledging that all parties involved are on the same page. It outlines an agreement between two or more parties before the deal is finalized. While it is not legally binding, it is a preventative measure for miscommunication.

Purchase & Sale Agreement: The purchase and sale agreement, or the P&S agreement, is the document received after mutually accepting an offer, which states the final sale price and all purchase terms. Some items covered in the P&S agreement include the final sale price, earnest money details, closing date, title condition, contingencies, and more. Inclusions on the P&S contract will differ from state to state.

Preliminary Title Report: A title is a legal document listing the history of ownership of a home. After the buyer and seller have reached mutual acceptance, an attorney or title company will review the home's title to look for any problems that might prevent the home from being legally sold. The results are written up for the buyer in a preliminary title report. A description of this nature will reveal if anyone other than the seller has a legal claim to the property.

Title Insurance: Title insurance, as its name suggests, is a preventative measure that protects a buyer from anyone who challenges a property's ownership.

Proof of Funds: Proof of funds represents a buyer's intent. It is a way for borrowers to prove that they have access to sufficient funds to complete a transaction. Typically a bank statement, retirement account statement, or other legal form is acceptable.

Proof of Insurance: Proof of insurance is required for either a purchase or refinance to avoid a devastating loss.

Personal Guarantee: A personal guarantee places some skin in the game for the borrower. In other words, the borrower puts their assets (real estate, savings, etc.) on the line. Of course, this is only in cases where the borrower can't repay the loan.

Mortgage Note: A mortgage note is a promissory note secured by the mortgage loan. The loan structure is agreed upon, and the borrower signs the document.

Legal Documentation

A traditional one-page form note and two-page form deed of trust no longer address the myriad of issues in today's legal environment. Environmental problems, lending issues, and the enforceability of securities and protections must be addressed.

Legal documentation should be consistent with institutional lenders' employment, only eliminating provisions that may not be relevant or unnecessary. Additionally, special consideration must be given to a well-drafted broker's affidavit, especially in states where a licensed real estate broker must broker an otherwise unethical loan.

Summary

Private money is a great way for investors to supplement their income if they cannot fully fund a deal with the help of traditional loans or available cash funds. Private lenders are willing to give loans to investors who can present the profitability of the value they are investing in. Still, investors must be prepared to present the proper documentation to display the deal's viability. If you do your research and mind your due diligence, you will be steps away from funding your next agreement with a private money loan in Arizona.

Thursday, February 9, 2023

Is It About Time You Considered Using Arizona Hard Money?

One of the most common hurdles for new investors is finding hard money in Arizona to fund their deals.

While this can be a struggle at times, it is currently more accessible than ever to find the capital you are looking for. Between lines of credit, private lenders in Arizona, retirement funds, credit cards, and traditional bank loans, there are numerous options available to those that know where to look. The key is to find a funding source that works for you. Often, that source will be an Arizona hard money lender. Hard money has gotten a bad rap over the years but has proven to be a reliable way to fund deals. If you don't have a hard money outlet or have yet to use one, now may be the time to find as much information on them as possible.

An Arizona hard money lender is an individual or group of individuals that lend money on their terms. They put stock in the property and the actual financials of the borrower more than anything else. With traditional lender financing, if your credit score falls below a certain threshold, you may have trouble getting approved regardless of other factors. However, hard money lenders have their own set of criteria. For this flexibility, there are more fees and higher interest rates. Some investors will balk at those opting for lower rates that banks offer. This can work on specific properties and deals, but you need to act quickly on those that are time sensitive, and that's precisely what hard money allows you to do. Here are just a few of the benefits of using a hard money lender:

1. Speed: In today's real estate landscape, how quickly you can close is often more important than the amount you offer. Too many lenders have been burned in the past waiting for deals to complete that never do. Even if they close, a financed transaction's average length is approaching 45 days. Most sellers would take a slight discount with the assurance they can complete in a week rather than risk closing in 45 days. This speed allows you to make offers with five or seven-day closings. On borderline deals, you can bet that your offer will be the one that is accepted.

2. Volume: Instead of waiting 45 days to start working on the property, you can cut the time down to just a few weeks. Shaving a few weeks off every rehab project, you create the opportunity to close more deals over a year. Adding just one or two values to your portfolio will increase your bottom line exponentially. Often, you may be able to close two or three times the volume you locked the previous year. When the number of deals you complete starts to creep upward, so will the number of contacts you make. The people you meet are just as important as the deals themselves, if not more so. Remember, real estate is a people business. The more sales you make, the more contacts you can make. In turn, those contacts may even lead to more deals.

3. Quality: Having capital to close is only part of the benefits that coincide with hard money. With Arizona hard money in your corner, you can do whatever needs to be done for the property. Instead of cutting corners to save money, you can do the work you know needs to be done. This will help you maximize your bottom line and improve your reputation in the industry. In addition, realtors and fellow investors who see your finished products may want to work with you. Quality will also help get your property sold to end buyers much faster. Instead of hoping that an offer comes in, you will have your choice of deals.

4. Bigger Projects: Increased capital allows you to slowly build your way up to more significant projects. Instead of looking solely at single-family properties, you can start to look at multifamily and commercial deals. Furthermore, closing more deals will increase your capital and give you a significant share of more extensive sales. There is nothing wrong with sticking to condos and single-family properties, but having hard money behind you gives you to opportunity to explore other options that come your way.

Aligning yourself with a hard money lender doesn't mean you have to use them on every deal. For example, a property you want to buy and hold may be better served with a long-term interest rate of around four percent. However, most rehab projects need the efficiency that hard money brings. The ultimate goal should be to save some capital from every deal until you have committed enough to fund them yourself. You may have to make a little less per deal to increase your bottom line until you get to that point.

The biggest knocks on hard money in Arizona are the high fees and points. These accrue from the time of settlement until you can sell the property. In some cases, it can span several months. However, it is a small price to pay for what you get. In addition, the annual interest over a few months is a relatively minor factor compared to all the other expenses you will incur.

Additionally, you only pay these on deals you close. If you can't complete, you can't earn; Arizona hard money helps you close more deals. It is not for everyone on every sale, but it should be a part of your financing options.