Buying A House In Arizona
5 Myths On Buying A House In Arizona – Destroyed
Buying a house in Arizona has changed a lot since 2003. The changes have also destroyed a number of long time home buying myths.
Prepare yourself to be surprised as we destroy 5 popular myths about buying a house in Arizona.
Myth 1: you must have a 20% down payment to consider buying a house in Arizona. That means a potential buyer will need thousands in available cash to start the home buying process.
Completely false. In today’s real estate market there are conventional loans with only a 3% down payment. The veterans administration home mortgage program for veterans covers 100% of the price. NO down payment is required.
Even in the middle of the mortgage calamity a 20% down payment was a norm. However, getting the 20% for the down payment was very flexible. Today, where the down payment comes from is more stringent. However, loan programs with lower down payments can be found.
Myth 2: Only those with stellar credit score rating can get a home mortgages.
Not exactly. The last half dozen years have been rough in most areas of the U.S. High unemployment, financial crisis and the real estate collapse. People in many areas where adversely effected due to no fault of their own. Many lenders have instituted mortgage programs to help these “collateral damage” situations.
Credit score blemishes such as personal bankruptcy, short selling or home foreclosure may not prevent you from from obtaining a mortgage. Even with a reduced down payment for example, 3.5% for an FHA loan.
One new FHA initiative is known as “Back to Work”. This program reduces the time to be eligible for a new mortgage after a foreclosure or bankruptcy. Some mortgage applicants may only have to wait 1 year to apply for a new mortgage. However, applicants will need to prove their past financial hardships had been caused by extenuating situations out of their control.
Myth 3: Fixed rate mortgages are the only ones to have.
Not the case. The 30-year fixed rate mortgage is among the main myths regarding buying a house in Arizona. Even today, typical American household remains in their home for about 7 years. This has grown to 9+ years in some areas.
Generally, 30-year fixed rate mortgages will have higher interest rates compared to adjustable rate mortgages (ARMs). Home buyers need to take a close look at their plans for the new home.”
The MBA study showed only 6.5% of applications for home mortgages were for ARMs. A standard ARM had a 3.21% interest rate, versus 4.69% for the normal 30 year fixed rate mortgage. That interest rate difference can add up to a big difference in interest costs over a 7 to 10 year period. The likely life of the mortgage.
Tackle the calculations.
Myth 4: eliminate the realtor, rep yourself and you can save a quick 3%.
This is almost never true.
A realtor’s commission – 5 or 6 % in the majority of the country – is paid by the seller. NOT the BUYER. For most listing contracts the realtor agrees to “co-broke”. That means the agent will split their commission with the buyer’s agent.
The standard Tucson MLS listings agreement is for a specific commission percentage. Usually, it is for 6%. The listing broker will offer to share a part of that if a cooperating buyer’s agent brings the buyer. The “co-broke” is usually 3%.
The buyer has no say in this, at least in theory. So, thinking the buyer can represent themselve and saving the entire 3% is not likely. Doing this also creates opportunities for other risks.
Myth 5: Whenever you can, you ought to consider buying a house in Arizona right now.
Very likely homes or condos will probably be decent investment during the next 10 to 20 years. Clearly, markets prices have declined for 2005 to 2007 highs. And many believe that “what falls, will go up”. Will this be true for those buying a house in Arizona? Only time will tell.
Nevertheless there are reasons why renting may be a better choice for many. It’s flexible. There’s almost no commitment. Should you want to move, you can. A new job in another part of the country, a romance gone bad or just the desire to live somewhere else. It doesn’t matter. When you rent it is usually easy and cheap to move on.
There is no way to know how long recovery will take for housing in your area. Some gurus predict it could take 20 years before the 2006 highs are hit once again.
Questions about the Tucson Real Estate Market or Tucson Homes for Sale?
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