Articles

Buy a Home in Phoenix
Without Having Thousands In the Bank

Buying a home in Phoenix sometimes seems like a daunting prospect, especially when buyers are confronted with a down payment. In the past, home buyers had to use a traditional mortgage plan: one that demanded that buyers put down 20% of the purchase price of the home. Fortunately, there are a lot more options for new buyers, especially those interested in a home in Phoenix.

Think about how much of a down payment you would have been required to save with a traditional loan. If you found a Phoenix home for sale listed at  $300,000, you would have been required to put down $60,000. That's an enormous amount of money to save.

The traditional 80/20 loan wasn't so unrealistic decades ago when home prices were so much lower. When a new home was priced at $50,000, saving $10,000 wasn't quite such an insurmountable obstacle. But rising home prices have meant that mortgage companies and banks either have to come up with other options, or buyers would have to wait decades to purchase a home.

There are a number of lending programs that make buying a Phoenix home for sale much more affordable. Some of the lending programs require no down payment, while some programs only require a 5% down payment.

Although these mortgage programs make it more affordable for home buyers to get into a home, there are some factors to consider. When a buyer takes a loan out with less than 20% down payment, the lender will almost always require that the buyer pay a private mortgage insurance (PMI).

Private mortgage insurance protects the lender in the event that the buyer should default on the loan. PMI is usually assessed at 1% of the loan value. The PMI is added into your monthly payment, but it does not go towards the repayment of the loan or the interest. PMI is partially tax deductible. When the loan amount drops below 80% of the appraisal price, the PMI is eliminated.

There are other options for purchasing a Phoenix home for sale. As an example, buyers can take out a piggy back loan. This is actually two loans; the first loan covers 80% of the home price, the other loan covers the remaining 20% of the price. If you take this type of loan, you avoid paying PMI on the loan.

Buying a Phoenix home is an important step in building a strong financial future. But it can be difficult to take the first step. That's why it's so important to talk with a mortgage consultant to discuss your options. You will find that there are a number of options that work well for you, and allow you to get into the home of your dreams in Phoenix.

Utilize my Phoenix MLS services to find a Phoenix home for sale.