Here are a few Scottsdale home buying tips for renters to consider if you're ready to take the big step toward home ownership. In addition to the basics like saving up for a down payment and deciding on a housing budget, there are other important considerations to address.

Renters have become accustomed to paying a fixed amount of money during their rental term. For the most part that amount rarely changes until it’s time to renew the lease. For homeowners, it can be a slightly different story. There are four major components that comprise a homeowner’s monthly house payment. The monthly payment is made up of principal, interest, taxes and insurance, or PITI. Let’s take a brief look at each.

Grasp the entire cost of owning a home

Our Scottsdale home buying tips looks at the true cost of owning a home.

mortgage payment is the combination of principal and interest – the principal is the actual dollar amount borrowed from the mortgage lender, and the interest is the cost that’s charged for the money borrowed. On a home mortgage loan, the principal portion of the monthly payment reduces the outstanding balance of the loan. The interest is charged on the amount of principal still owed as the loan is slowly reduced. For a more in-depth look, search online for a mortgage loan calculator for an amortization schedule showing what portion of the monthly payment will be applied to principal and what amount goes toward paying interest.

The taxes in the PITI acronym are real estate property taxes. The property taxes are determined and assessed by the county or municipality in which the home is located. While real estate taxes vary throughout the country, most experts agree the average tax bill equates to between 1%-1.5% of the value of the home. Real estate taxes are payable annually, however, depending on the type, amount and loan-to-value ratio (LTV) of the mortgage lenders may require you to include 1/12 of the estimated property taxes in each monthly payment. When the taxes are due and payable, the lender will pay the taxes out of the escrow fund.

Insurance coverage is a requirement by most every mortgage lender. The lender will require the borrower to have sufficient coverage to repair or rebuild the home – their collateral, or security for the principal they loaned – in the event of a fire or other peril. As is the case with real estate taxes, insurance premiums can also be required by the mortgage lender to be paid monthly into an escrow account.

Lastly, here’s another of our Scottsdale home buying tips designed to help understand the full cost of home ownership. If a prospective purchaser is considering buying a condo, there most likely will be an additional component to the PITI mentioned above: Monthly Homeowners Association (HOA) dues. The HOA fees help pay for those areas of the condo complex that are for the benefit of all the owners or residents. Examples are parking lots, landscaped areas, pools and clubhouses. In addition, the fees collected are designed to pay for routine maintenance such as painting the building’s exterior or replacing the roof. While most HOA fees are for condo complexes, more and more neighborhoods with common areas requiring upkeep and maintenance are forming homeowners associations, which will require dues.

Understand the tax benefits of owning a home

One of the most important Scottsdale home buying tips to be aware of involves your income taxes. Aside from the annual appreciation most homes enjoy, the most popular advantage of homeownership is the tax savings. Mortgage loan interest and real estate property taxes can be deducted from your adjusted gross income on your income tax returns each year. That, of course, reduces your taxable income – and your resulting tax liability.

Know the comparison math

A popularly used relationship – and argument for buying a home versus paying rent – is the cost comparison of what a homeowner pays in PITI and what a tenant pays in monthly rent. While in theory the concept is good, the most accurate comparison is to analyze the after-tax savings of owning a home versus renting. For example, a $300,000 home may cost (after taxes) $1,215 PITI each month. Compare that to an apartment or home that rents for $1,200. On the surface the math may imply purchasing a home is a better investment. However, remember this illustration is based on a down payment of 20%, or $60,000.

Understand mortgage options and programs

Among vital Scottsdale home buying tips is how to best and most affordably finance the purchase of a home. While 20% has traditionally been the amount most Americans assume is needed for a down payment, it’s largely a misconception. There are loan programs available today for borrowers with as little as a 3% down payment.  As mentioned above, depending on the type of mortgage loan and the LTV ratio, a borrower will have to pay their property taxes and insurance premiums each month into an escrow. In addition, if the down payment is less than 20% or if the LTV ratio is more than 80%, private mortgage insurance will be required. Mortgage insurance protects the lender against the borrower defaulting on the monthly payments. Annual mortgage insurance premiums cost roughly .85% of the mortgage amount, so that needs to be figured into the monthly payment in addition to PITI.

Using the example of the $300,000 home above, the monthly PITI (and mortgage insurance) would be roughly $1,995 with a 3% down payment with a 30-year fixed rate mortgage based on current interest rates. After taxes and all deductions, the total monthly housing cost would be around $1,600. Best of all, the down payment would only be $9,000 – plus whatever loan closing costs the purchaser would be required to pay.

Know you credit score inside and out

Since credit scores are very important when it comes to qualifying for the lowest interest rates on home mortgages, it’s important for prospective homebuyers to know as much about their credit as possible. If you’re a first time homebuyer and only have a few accounts, consider opening one or two new accounts. Be aware, however, that your credit score may decrease from 10-15 points when you open an additional account. Over time, though, as you demonstrate a good repayment history the score will increase. Just understand, this takes time, it doesn't go up in a week or a month.

Read more about home buying tips in the section of articles on Scottsdale Home Buying Tips just below our Scottsdale Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.

When you hire a Scottsdale home inspections specialist, there are often problems that even the most knowledgeable and experienced home inspectors can’t always see. While trained professional inspectors can notice wood rot, spot weak places on a home’s roof or locate cracks in a foundation, there are some areas that can go undetected. While a home inspector often can be a super hero, he isn’t Superman. He can’t use x-ray vision to see through walls, between floor joists or inside sewer pipes. In addition, the main purpose of most Scottsdale home inspections is to uncover problems or defects that could adversely impact the value of a house or how safe it is for its occupants. While a home inspection is always a good idea and can certainly help verify the home is a good investment as well as a safe structure, there could be existing problems that may create additional issues at a later date. Let’s take a look at four areas of concern that can go undetected.

HVAC Issues

Issues in the heating, ventilation and air conditioning systems (HVAC) of a home are among the most difficult for home inspection professionals to detect. Since running a unit to test its cooling or heating capabilities can potentially damage it in certain conditions, most inspectors don’t perform such tests. One experienced home inspector explained it this way, “I can tell if a unit isn’t working, but I don’t have time during a home inspection to determine if the system is adequate for the house they’re trying to heat or cool.” The inspector recommends that if you have concerns about the home’s HVAC system, you should have it checked by a licensed HVAC specialist, in addition to your home inspection.

Water Leaks or Damage

Scottsdale home inspections will include checking pipes for water leaks.

A home inspector will, of course, turn on faucets to test pipes, water pressure and other issues. However, if a house has been vacant for any extended length of time, previous evidence of water leaks or damage has likely dried up. It may take several days for the leaks to return. In addition, damage to ceilings or walls could have been covered up with paint or wallpaper, making them nearly impossible to detect.

Furthermore, if the house has a leaky roof, chances are even the most experienced home inspector may miss it. Normally, inspectors make their assessments by visually scanning the room from the ground. Rarely is there time or opportunity to climb on the roofs to further inspect them. In the event an inspector does climb atop the roof, snow, ice, fallen leaves or other debris may prevent him from determining its true condition.

Environmental Toxins

In 1978, the federal government called for a moratorium on the production and use of lead paint and asbestos-based materials used in construction. If the home you plan to purchase was built before 1978 it’s a good idea to pay to have specialized tests conducted for these environmental toxins. In addition, higher than normal radon levels can occur in any home – no matter the age. While lead paint, dangerous asbestos and radon pose potential risks, they’re not included on the list of items most Scottsdale home inspections experts look for. If you know about these environmental toxins prior to the closing of the sale, ask the seller to pay for part of the costs to remove or contain the issues. Keep in mind, the costs of removing or containing these and other toxins can be surprisingly high. For example, according to the Environmental Protection Agency (EPA) the cost to professionally remove lead-based paint can run from $8 top $15 per square foot. On a 2,400 square foot home, that amounts to between $19,200 and $36,000!

Blocked or Damaged Sewer Lines

The sewer line that goes from a house to the city sewer main is the responsibility of the homeowner. It’s important, therefore, to know if there are obstructions or leaks in that sewer line. A clog or breakage could cause major issues – such as raw sewage seeping through the line or creating back ups all the way to the indoor drains.

Scottsdale home inspections usually include the type of drain pipe used in the sewer disposal and an estimate of the pipe’s age. However, it probably will not include an assessment of the structural fitness of the sewer line or its overall condition. If you’re concerned with the sewer line in the home you’re interested in buying, you can have a separate inspection done by a qualified company. They will determine if tree roots or other obstructions have adversely affected the line. A complete video sewer inspection will cost $250-$500 – compared to a total sewer line replacement, which can cost $25,000 or more.

Remember, an experienced, qualified professional home inspector can give you vital information about your home’s condition and potential issues to repair or keep a watchful eye on. However, the unknown factors are the hidden potential problems that lurk “behind the scene” that an inspector cannot see or may not be able to detect. If you’re really interested in a particular home you want to buy, a home inspection is an expense that will likely more than pay for itself – either in actual savings before problems occur, or in the peace of mind in knowing the house is free of major issues. In addition, spending the extra money to have some of the above-mentioned tests and inspections performed may also save money and headaches down the road. Remember the old adage:  "An ounce of prevention is worth a pound of cure." That certainly applies to a large purchase like a home. Knowing what issues you may be faced with in the future will save time, money and aggravation – and just may mean the difference in making buying your dream home a living nightmare.

You can find more articles pertaining to Scottsdale home inspections in the Scottsdale Home Inspections section of our site below Scottsdale Real Estate Categories in the column to your right.

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Interest rates recently rose slightly, raising the question of what affect they will have on Scottsdale mortgages. Rates increased for the first time in more than two months, creating a sell-off in the U.S. Treasury bond market. Mortgage interest rates have traditionally been tied loosely to the 10-year Treasury bond yield. While the increase in interest rates was only .125% (1/8th of a percentage point) the uptick was enough to adversely affect stocks in the nation’s homebuilding industry.

Despite the impact the interest rate increase had on Wall Street, its relationship to Scottsdale mortgages is expected to be minimal. Let’s take a look at the various forms the rate rise will likely have throughout the nation. Historically, a slight uptick in interest rates – if anything – has signaled the end of rate drops, causing prospective home purchasers to finally make a move to buy before rates go even higher. When rates are low and could be expected by some to inch even lower, potential homebuyers often wait in the wings for rates to get even better before they decide to buy.

A mortgage industry spokesperson said that when rates move upward – even the slightest amount upward – there is always room for concern. He called the interest rate increase “a serious threat to low, stable mortgage rates until proven otherwise.” Mortgage interest rates have been at near-record lows for most of the summer, so it’s likely that a movement upward has raised more than a few industry eyebrows – especially among those in the business of making Scottsdale mortgages.

Regardless of the amount of the increase, the simple truth is that higher mortgage rates add to the already-expensive cost of home buying. As mentioned, the rate rise could push some homebuyers into action as they scramble to buy before their costs rise. In addition, higher interest rates may startle some sellers into cutting their asking prices in an effort to offset the news. It’s one of the few ways sellers can combat the chance of losing interested buyers.

What it means for homeowners with existing Scottsdale mortgages is this:

Homeowners with Scottsdale mortgages should seriously consider whether now is the right time to refinance.

It may finally be the time to refinance. Despite interest rates being low for months, experts say there are hundreds of thousands of borrowers who have procrastinated or otherwise not refinanced.

If the Federal Reserve decides to raise its funds rate at their next meeting, mortgage rates still may not move much higher. Remember, when the Fed made its first increase last December, mortgage interest rates only increased slightly and then leveled off just as quickly. Industry insiders familiar with Scottsdale mortgages say the longer-term rates such as 10-year U.S. Treasury yields and mortgage interest rates do tend to move with expectations of Federal Reserve rate increases – not the Fed’s actual decision to hike rates. The experts use December 2015 as their most notable example. The Fed increased their rate slightly and mortgage rates dropped. Why? Because the market had spent much of the preceding period in anticipation of a rate hike by the Federal Reserve. In this scenario, the threat or expectation of an interest rate increase caused less concern than when the actual increase occurred. Therefore, the market adapted ahead of time to whatever interest rate changes were headed its way.

Let’s assume rates on Scottsdale mortgages rise slightly in the expectation of a Fed rate increase. Historically, there has been a remote chance that mortgage rates would move a full point upward. Need more reassurance? Mortgage rates have only increased by .5% (or half a percentage point) 14 times in the past 45 years, according to a report issued by John Burns Real Estate Consulting. The firm further predicts rates will stay below 4% through 2018. Burns had this to say about the effects that interest rate increases on Scottsdale mortgages will have on various segments of housing. “Historically, they have hammered builder stocks, hurt new home sales bad, hurt existing home sales a little, and had very little impact on home prices unless there was a recession too," noted Burns. "My conclusion is that investors are right to punish the stocks, but often punish them too hard.”

In addition, most experts say that even if rates were to make another move upward, the housing market has bigger issues to worry about. Supply is still a major consideration, and the lack of homes for sale continues to move home prices higher and higher, adversely affecting affordability for most Americans – a problem that is more severe than slightly higher mortgage interest rates. While homebuilders work hard to increase production, they are doing so in the face of rising costs for developable land and higher labor costs. Plus, intrusive construction regulations and restrictions have made homebuilding more challenging than ever.

In conclusion, nobody likes to see interest rate increases – especially among Scottsdale mortgages – but the resulting impact will probably only hurt the housing industry minimally, at best. Interest rates have been very low for a long time, and there’s little reason to think that increases – even if they do occur – will be large enough to make a difference in the housing market. The additional principal and interest payment that even a 1% increase would have is less likely to prevent buyers from staying put in their existing homes or for renters to continue to pay rent at ever-increasing rates. Simply put, as is the case with many movements in the marketplace – interest rates among them – the effects vary from situation to situation and market to market. Furthermore, for purchasers who have their eye on moving out or moving up, home prices are far more likely to get their attention than small increases in rates affecting Scottsdale mortgages.

You can find more articles pertaining to Scottsdale mortgages and the overall mortgage market in the Scottsdale Mortgage Info section of our site below Scottsdale Real Estate Categories in the column to your right.

We also post tips daily tips, many of them related to Scottsdale mortgages, on Facebook and Twitter and would love for you to follow us there as well.

Even though the Scottsdale tax season has come and gone for most filers, “extension season” is here until October 17th. If you’re a homeowner and you filed an extension back in April, you’ll want to make sure you take advantage of some important Scottsdale tax deductions that can reduce your income tax liability when you file your returns.

Mortgage interest, real estate property taxes and mortgage insurance premiums (if applicable) are all deductible. Added together, these items can amount to a significant savings on your tax bill. Be prepared to include these deductions on your income tax returns. After all, tax advantages are among the major perks of home ownership.

Let’s examine four Scottsdale tax deductions you should definitely take advantage of.

Looking at Scottsdale tax deductions for late filers for 2015

Home mortgage interest

Your monthly mortgage payments include principal and interest. The interest is the amount you can deduct at the end of the year on you income tax returns. Federal regulations allow a homeowner to deduct the interest amount (up to $1 million if you’re filing jointly, or $500,000 if you’re single or married and filing separately) on a primary residence. Since the amount of interest you pay each year on your home mortgage is likely one of the largest deductions you can take on your tax bill, it’s important to know a few “ins and outs.” The mortgage interest deduction is available for interest paid on home purchases, refinances, home equity lines of credit (HELOCs) or second mortgages for any purpose. The amount of interest deductible as a result of home equity debt only applies to loan amounts up to $100,000 ($50,000 if you’re single or married and filing returns separately.) As you can imagine, the interest deduction can total several thousand dollars and can make a big impact on the amount you owe when you file your returns. Remember, it’s important to itemize your deductions accurately. Mortgage lenders are required to send you an annual statement showing how much interest you paid during the year.

Mortgage points

If you paid “points” on your mortgage loan when you obtained financing you may be able to deduct them, as well. Points are percentage points of the loan amount and occur in one of two ways:  discount points, which are paid by the borrower to enable him to prepay a portion of the mortgage loan interest to “buy down” the interest rate and the loan origination fee. As the name implies, a point is the equivalent to 1% of the mortgage loan amount. Often, homeowners forget about this all-important deduction. Overlooking points can be an expensive mistake. For example, if you borrowed $350,000 and paid an origination fee of 1%, the deduction of $3,500 could go directly to reducing your tax liability.

Real estate taxes

Another of the Scottsdale tax deductions you’ll want to make sure you include are the property taxes on your home. Real estate taxes are deductible on primary residences and can be deducted in the year in which they are paid. The property assessor’s office in the county where your home is located usually mails a statement that includes the amount of your real estate property taxes due. However, keep this in mind – if you purchased a home during the year the property taxes were likely pro-rated on the closing statement. The sellers were reimbursed for the portion of the taxes they “paid” up until the date of settlement. As the buyer, you can then deduct the entire amount of the real estate taxes – not just the amount you were responsible for in the pro-ration.

Mortgage insurance premium payments

When you purchased your home and obtained mortgage, if you made a down payment of less than 20% – or if your loan-to-value (LTV) ratio was less than 80% – you’re probably paying mortgage insurance to the lender each month as part of your payment. Mortgage insurance is a type of coverage that protects the lender against the borrower defaulting on the mortgage payments. Currently, mortgage insurance premiums are deductible for policies provided by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Rural Housing Service – in addition to policies provided by private mortgage insurance companies on most conventional home loans.

While the Internal Revenue Service allows you to deduct the insurance premium payments as part of your mortgage interest deduction, there are restrictions for higher-income borrowers. For example, the deduction is not available to homeowners whose adjusted annual gross income is $109,000 or more (or more than $54,500 for single persons or married couples who file separately.)

Non-deductible items

While the list of Scottsdale tax deductions can be quite a tax savings for homeowners, everything related to home ownership isn’t necessarily part of that list. Let’s look at a few items that aren't deductible. Be sure costs for these items don’t make their way onto your personal income tax returns unless you are running a business from your home, in which case, many of the rules change!

•  Homeowner’s insurance coverage or title insurance coverage. Remember, mortgage insurance is the only type of insurance that can be deducted for most individuals

•  Real estate depreciation

•  Utilities expenses (electricity, gas or water)

•  Loan closing costs. Points are the only exception.

•  Lost or forfeited deposits, down payments or earnest money

•  Most home improvements – unless they were financed as part of your home’s equity, or you own a home-based business and claim part of your home on your taxes.

•  Homeowners association (HOA) dues, fees or assessments

•  Transfer taxes, stamp taxes, or recording fees in the sale of a personal residence

In summary, home ownership has always provided tax advantages. It’s one of the attractive features of buying and owning a home. The deductions are part of a federal government incentive for Americans to own their own homes. Remember this, however, if your list of itemized deductions doesn't exceed the standard allowable deduction for which you’re eligible, then you should claim the standard deduction.

As always, if you have questions about your income taxes, what’s deductible and what’s not – it’s always best to consult a professional tax advisor. Deductions are important, and you certainly want to make sure you take advantage of every opportunity to save money on your taxes.

You can find more articles pertaining to Scottsdale tax deductions in the Taxes section of our site below Scottsdale Real Estate Categories in the column to your right.

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Among several housing-related stories making the news around here locally asks the question, Is there a Scottsdale housing bubble in our future? Before we can attempt to answer the question, let’s define what is meant by a “housing bubble.”

What exactly is a "Housing Bubble?"

The Scottsdale housing bubble debate continues.

A “housing bubble” is an increase in housing prices fueled by demand, speculation and fervor in the market. Bubbles normally begin with an increase in housing demand, usually accompanied by a very limited supply. When speculative housing investors enter the market it further spikes demand, which increases prices even more.

While the definition certainly sounds like what’s been trending in the housing market lately, let’s look at several reasons there isn’t a Scottsdale housing bubble on the horizon.

Average home prices are currently higher than they were in 2007 in more than 20 major metropolitan markets. In addition, larger cities with limited home inventory of both new and existing homes are seeing prices rise as high demand continues. Home sales throughout the nation recently reached the second highest level in more than 10 years, according to the National Association of Realtors. Despite these occurrences, some housing analysts say any “bubbles” that may exist are relegated to certain local markets, and the bubbles haven’t created the financial risk inherent with the housing boom of roughly 10 years ago. The earmark of the housing bubble that occurred during that time period was the easy availability of credit – highlighted by borrowers that should not have qualified for mortgages they received.

Still, the housing market is nowhere near where it was during the housing boom – and the resulting bust – that made just about every city's real estate news almost daily.

While mortgage interest rates are near record lows and the affordability of housing is still high, absent are the speculative buyers driven by easy credit availability. During the boom, many of these speculators were investors seeking to make a quick profit. In addition, the lenders who fueled that speculation along with making credit available to non creditworthy borrowers have long since learned their lesson, it appears. So, too, have the mortgage lending regulators, who have implemented a range of policies and procedures to better safeguard lending institutions from violating lending practices that may repeat history.

The Scottsdale housing bubble debate continues.

Experts say definitive housing bubbles are a rare occurrence. Despite some of the warning signals that exist in today’s market, the truth of the matter in today’s Scottsdale real estate market is, there are just as many other factors that are non-existent.

A great number of well-respected economists have studied and tracked housing bubbles. Most of them agree that when a market bubble occurs, home prices increase slowly to being with and gain traction and momentum in time. During this rise in prices, the home buying public is usually skeptical and unfazed initially. Economists say they’ve seen the same sorts of bubbles in other markets – stocks, commodities, futures, even art and wine. Over time, the initial skepticism morphs into a semi-acceptance by the buying public, as they witness prices being pushed even higher, or as the name implies, the bubble gets bigger.

As the low cost and high availability of mortgage credit gives the bubble a greater opportunity to continue to grow, it invites new participants. Many of these new purchasers, or speculators, are less credit-worthy and less savvy than typical real estate investors. However, they all have one thing in common – they all envision selling their newly-acquired real estate properties at a profit – fueled by the higher prices they feel they can command. This increased speculation can grow at such a rapid pace that the news may imply “the sky’s the limit” when it comes to housing prices in such a market. The result? Investment growth expands so much that it increases the housing supply, which in turn exceeds the existing housing demand. When supply outweighs demand, prices fall – or in this case, the bubble bursts.

Economists argue that what’s missing in the Scottsdale housing bubble equation is widespread participation on the part of the buying public. Gone are the days of flipping condos in popular locations. Gone, too, are the mortgage loans made on homes that exceed their value. The biggest change is that borrowers with poor credit aren’t able to borrow money as easily as they were during the housing boom and resulting crash. A case in point is the simple fact that it’s difficult, at best, for a homeowner who is still underwater on his mortgage to refinance.

Looking ahead.

Some real estate analysts say they expect certain changes in the near future to occur that may burst any regional, localized Scottsdale housing bubble that may exist. They cite potential interest rate increases by the Federal Reserve as among such events. However, they are quick to point out that the banking system today – unlike the real estate news of a decade ago – isn’t overwhelmed with sub-prime mortgages. In addition, most banks aren’t leveraged to the success of the real estate market anywhere near the degree that many were years ago.

Simply put, the existing housing market issues aren’t severe enough to spark another recession – at least not one of national proportions. Most economists agree that there may be a series of “mini-recessions” that are locally or regionally based and will only affect the players in high-end residential or commercial real estate. That bubble – if it can be called a bubble – will likely burst.

In the meantime, there will be expected fluctuations in housing market supply and demand. New home construction will continue to try to keep pace with the demand for new products and new home innovation at prices average American families can afford. And while interest rates may not stay as low as they have been, there’s little reason to believe that mortgage availability will suffer for the time being. Comparatively speaking, while there are some similarities in the true definition of what a Scottsdale housing bubble is, the simple truth is that the U.S. is no where close to the dire straits the housing market found itself in just a short decade or so ago.

See more articles pertaining to real estate news in the section of articles on Scottsdale Real Estate News just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.