Whether it's a topic like the Scottsdale mortgage industry or another subject, we live in an information-rich environment. The Internet, 24-hour cable news stations and a burgeoning social media network keeps Americans in touch with available information almost instantly. Yet the endless wealth of information at our disposal also means there's a glut of misinformation being disseminated as well. Much of that half-correct, or in many cases, blatantly incorrect information concerns the housing market and the mortgage industry. Let’s look at a few commonly-held Scottsdale mortgage misconceptions.
Scottsdale Mortgage Myths Dispelled
Myth #1: You Have to Have Perfect Credit.
In a recent survey, nearly 67% of participants thought their credit had to be very good — nearly perfect — in order to qualify for a mortgage. The truth is there are loan programs available for borrowers with less than perfect credit scores. While it's true that a higher credit score helps in getting a preferred interest rate, even if you have a few credit bruises and blemishes you can still qualify for a home mortgage. Experts say there are other factors that lenders consider like employment stability, income and debt ratios. Remember, every loan situation is different.
Myth #2: You Have to Have a 20% Down Payment.
This is another popular misconception in the Scottsdale mortgage market. For decades lenders have made home loans to borrowers with considerably less than a 20% down payment. Borrowers can avoid the required private mortgage insurance (PMI) if they have a down payment of 20% or more, but many Scottsdale mortgage lenders have loan programs designed for purchasers with little or no down payment. Industry experts continue to encourage homeowners to think of their houses as a home meeting a certain set of needs at a particular point in time — not as a financial investment with a guaranteed return or appreciation.
Myth #3: A Home is a Great Investment.
Owning real estate can be a sound investment over time. However, there are no guarantees. Many variables must be considered that may affect your home as an investment. In addition to the continued appeal of the neighborhood in which your property is located, other factors may impact your home's value: the home's age, its condition, and market supply and demand.
Myth #4: You Own Your House When You Close the Sale.
The term "homeowner" is used loosely to describe those who have bought homes. However, the simple truth is — unless you paid cash or traded for some other consideration — the majority of homeowners are "still buying" their homes. Because a Scottsdale mortgage institution loaned you the money to purchase your home, you don't really own it until the mortgage is repaid. The old joke about "the bank owns it" isn't just a joke… it's true.
Myth #5: Home Ownership is the American Dream.
While aspiring to own a home is an important goal to many, it’s not everybody's cup of tea. A great number of people in the United States will probably never be able to buy a home — and many simply prefer not to own. Some survey respondents cite upkeep or maintenance issues, resale concerns, problems with job relocation and other reasons they are content to rent instead of own. The "American Dream" can turn into a veritable nightmare in a recessionary economy or crumbling job market. Sadly, millions of home owners who experienced foreclosures during the most recent housing crash would agree.
See more articles pertaining to the Scottsdale mortgage market in the Scottsdale Mortgage Info section, of our site below Scottsdale Real Estate Categories in the column to your right. Remember, we also post tips daily on Twitter and Facebook. Check us out there, too.
More Scottsdale home improvement buffs are becoming "do-it-yourselfers" than ever before. According to a recent survey conducted by the Harvard Joint Center for Housing Studies, the home remodeling and repair industry is expected to reach $325 billion this year for the first time since 2007.
Why is the Scottsdale Home Improvement Market So Hot?
Experts cite two big reasons for the recent upswing in home improvements: a surge in the sales of previously owned homes, and rising sales prices. Research has shown that home owners perform the remodeling around the time of sale, either before the home sells or within a two-year window after the sale. Sellers make home improvements hoping to receive a higher sales price, and recent buyers make changes or upgrades to better suit their needs or desires.
Scottsdale Home Improvement Tips.
Here are a few things to remember when it comes to dealing with Scottsdale home improvement stores.
Ask and you may receive. Getting the best deal possible is key to a do-it-yourself project. And the major Scottsdale home improvement stores usually have specials or sales, and usually have a price-match policy. A little-known tip, however, is that you can often negotiate a deal by just doing a little "horse-trading" or haggling. And while the stores don't make it a point to advertise this option, most have internal policies allowing local management to offer discounts to keep good customers.
Free isn't always free. We've all seen the free do-it-yourself workshops and seminars that some Scottsdale home improvement stores offer. Although they are usually informative and can build confidence, remember that their main purpose is to sell products. Don't be surprised if you’re asked to purchase something at the end of the presentation. After all, that's what they're in business for.
You may get a good deal, but nowhere near as good as the professionals. Contractors purchase in bulk, and they purchase often. As a result, they command a higher discount — and rightfully so. A Scottsdale home improvement do-it-yourselfer may take on a project every few weeks and perhaps a bigger job here and there. Contractors make their living performing home improvement work nearly every day.
See more news pertaining to the Scottsdale home improvement market under our Scottsdale Home Improvement section of articles to your right just below our Scottsdale Real Estate Categories.
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The effects of a down economy over the past few years has taken its toll on first-time Scottsdale homebuyers. Industry experts cite the inability of young Americans to accumulate savings for down payments and an unstable job market as major reasons. The result is they are sitting on the sidelines longer than ever before jumping into the home buying market.
According to the well-known real estate data source, Zillow, first-time buyers now rent for six years before deciding to buy — more than double the time from a generation ago. And, Zillow says, the average age of a first-time buyer is 33, three years older than their parents' generation which was around age 30.
Financial Challenges Facing Scottsdale Homebuyers
Millenials are having trouble saving sufficient cash to make down payments. But that’s not all. According to Census Bureaus reports they're slower in reaching certain traditional benchmarks such as marriage, having children and career decisions. As a result, homeownership has declined to a nearly 50-year low of 63.4%.
By waiting to purchase, many Scottsdale homebuyers are paying higher prices for their first homes when compared to their incomes. At slightly over $140,000, today's first-timers pay more than 2.5 times their annual income. A generation ago, a first home was roughly 1.7 times a borrowers annual income.
Zillow reports that millennials want to buy, but are forced to wait until they have children. And with rental rates continuing to rise, many prospective first-time Scottsdale homebuyers find it difficult — even impossible — to save enough money for a down payment to qualify for most mortgages. Another factor in waiting to buy seems to be their penchant for job security and stability. Not surprisingly, for a generation that first broke into the labor force during a recession, they recognize the importance of finding, keeping and thriving in a job or profession. As such, the timetable for Scottsdale homebuyers depends largely on employment stability.
Housing experts say this trend will likely continue, as millennials' habits remain unchanged as a result of higher rents and the increasing importance of finding and securing their place in the workforce.
See more articles pertaining to Scottsdale homebuyers in the Scottsdale Home Buying Tips section, or the Scottsdale Real Estate News section of our site just below Scottsdale Real Estate Categories in the column to your right.
Remember, we also post tips daily on Twitter and Facebook. Check us out there too.
The Home Affordable Refinance Program, or HARP, was instituted in March, 2009 and became a moderately successful tool for homeowners in the Scottsdale mortgage market as well as other markets all across the United States.
Help for Scottsdale Mortgage Borrowers
Because of fairly conservative loan-to-value restrictions, HARP was improved to HARP 2.0 in 2011 with LTV ratios higher than 125%.
HARP's primary existence is for homeowners who are underwater — that is, where the mortgage balance exceeds the free-market value of the home — to refinance their loans and save money over the long haul. Until recently, the program was not often utilized for investment properties. In a newly announced Federal Housing Finance Agency (FHFA) report, roughly 11% of HARP 2.0 loans were used to refinance investment properties. By refinancing, real estate investors could potentially reduce their monthly Scottsdale mortgage payments by two full percentage points. This would equate to a savings of several hundred dollars a month — and thousands over the life of the loan.
Interestingly, HARP guidelines make no distinction between owner occupied properties and investment rental properties. The mortgage must be owned by Freddie Mac or Fannie Mae. All a borrower needs to do is check with a lender to find out its status. Alternatively, this information is also available online. Other requirements include a mortgage balance that is greater than 80% of the value of the property; the borrower cannot have been more than 30 days past due in the last six months. In addition, the borrower can not have already used a HARP refinance on the property.
The benefits of a HARP refinance are many, for both investment properties and primary residences. Regardless of whether you owe more than 80% LTV on your mortgage, a HARP refinance doesn't require private mortgage insurance (PMI.) Plus, there are no closing costs that need to be paid up front. Borrowers can include them in the loan amount. Couple those savings with the interest rate savings and an investor can save thousands of dollars that can be pocketed or reinvested in the purchase of additional rental properties.
To date, the HARP program has produced savings for more than 400,000 investors. If interest rates remain fairly low there's plenty of reason to think that total will continue to rise.
So if you're a savvy investor, it's probably a good idea to look into whether you are eligible for a Scottsdale mortgage refinance using HARP 2.0. After all, saving money on your rental property, increasing cash flow and freeing up money for other potential investments are probably reasons you bought investment property in the first place!
Many lenders offer HARP loans for rental properties, so shop around. Remember, if your application is denied by one lender it doesn't mean it will necessarily be rejected by another. Most Scottsdale mortgage lenders will require copies of your income tax returns for the past two years, a copy of your lease agreement on the rental property, proof of the rental income, proof of your normal income, and verification of other assets in the event your rental income ends or is interrupted.
You can get more information about news that may affect the Scottsdale mortgage market in our section on Scottsdale Mortgage Info to your right under Scottsdale Real Estate Categories.
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When you're considering Scottsdale home improvements it's always a good idea to compare the cost of the renovations to what they may add to the resale value. Statistics show that homeowners rarely enjoy a full, dollar-for-dollar monetary appreciation of the cost of most home improvements. Some improvements may assist in selling your home when the time comes, both with a shorter time on the market and at a higher price.
Surprisingly to many homeowners, not all home improvements add value.
Some Scottsdale Home Improvements May Actually REDUCE Value
Many homeowners mistakenly assume that anything added to their homes will improve its appeal, and therefore its selling price. The sad truth is that some so-called "improvements" add little, if any, real value and in reality make your home less desirable to prospective purchasers.
Depending on your home's location — especially if it's in a sought-after subdivision or a popular part of the community — some buyers may be less concerned with things about your home that they can easily and affordably change. But if the changes seem extensive and expensive most buyers will just keep looking for a home more to their liking. That equates, of course, to a longer period of time your home may remain on the market.
Let’s look at five Scottsdale home improvements that may hurt your home’s value:
1 – Overdoing colors. Most real estate agents will tell you that homes with interior walls featuring neutral colors like whites, off-whites, or tans are more appealing to a broader market of homebuyers. No matter what your favorite color may be when you decorated your house, repaint it when you get ready to sell.
2 – Eliminating a bedroom, half-bath, or powder room. At one time — especially with older homes — eliminating smaller rooms may have made sense because it helped the "chopped-up" appearance. Despite the fact that most homeowners today are attracted to larger rooms and more airy, open spaces doing away with a half-bath or a powder room could be a mistake. Furthermore, it's probably never a good idea to reduce the number of bedrooms in your home, even if it's to make a larger master suite.
3 – Don't close in that garage! For years, homeowners have converted garages into living spaces — and many homes have suffered as a result. Today's home buyers like garages, especially if they live in extreme cold, hot and rainy climates. So before you add an enclosed garage to your list of Scottsdale home improvements, step back and reconsider.
4 – Don't "over-personalize" your home. Our homes are, indeed, our castles. Yet when you're ready to sell your castle, remember that everybody's tastes are different. Just like the pink or yellow paint on the walls, not everybody will appreciate the logo of your favorite sports team carved into the fireplace mantle in your man cave! Think about what will be appealing to the largest group of potential buyers before you make those Scottsdale home improvements.
5 – A swimming pool isn't all it's cracked up to be. In certain parts of the country, like Florida, Arizona, or Hawaii, pools are great — even expected in some neighborhoods. But not everybody is enamored with the idea of having a pool in the backyard. Pools are often seen as negatives because of the maintenance costs and potential liability involved.
Find more news pertaining to Scottsdale home improvements under our Scottsdale Home Improvement section of articles to your right just below our Scottsdale Real Estate Categories.
We also post tips on Facebook and Twitter. Follow us there for many other real estate related news articles and tips as well.