Maximizing Your Buying Potential in Scottsdale
If you've been following the real estate market at all, you've noticed that home sales have significantly slowed down. For buyers that are interested in a home in Scottsdale, this is definitely good news. Scottsdale has some very luxurious homes, and the reduced prices offer buyers great housing options.
But even with lower prices and less competition among buyers, financing a Scottsdale home can be a bit of a challenge. Many buyers find the option of a traditional fixed rate mortgage (one that requires 20% down payment) a bit of a challenge.
One of the lending options that make it easier for buyers is a hybrid loan. A hybrid loan has more relaxed lending standards than most traditional mortgage options. Within the hybrid loan heading, there are several loan options:
With a most lending programs, the buyer either puts down 20% of the loan value, or if they opt for a lower down payment, pay a private mortgage insurance (referred to as PMI) as insurance against a default on the loan. With a piggy back loan, you can purchase a Scottsdale home with a small down payment and no private mortgage insurance.
With a piggy back loan, you take two loans on the home. A first loan that covers 80% of the home value, and a second mortgage that covers the rest of the loan value (usually for 5% to 15% of the loan value).
Many home owners were taking out adjustable rate mortgages (ARM) a couple of years ago when interest rates were extremely low. Nowadays, some buyers are anxious about taking an ARM because of concerns about increasing interest rates. But a convertible ARM allows you to convert your mortgage from an adjustable rate to a fixed rate if the interest rates begin to climb.
With the convertible loan, you can find the ideal Scottsdale home and take a loan at an all time low rate. Then later, after you've built equity in the home, you can refinance if necessary and base your loan on your equity.
Homes in Scottsdale are a great value. Scottsdale is one of the many communities in the Phoenix area that traditionally maintains its real estate value and continues to appreciate. With the right mortgage option, buyers can get into homes that would have typically been a stretch, and enjoy the long term financial benefits of investment in Scottsdale real estate.