Phoenix Residential Homes

Take the steps necessary to get a letter from the lender stating you are "pre-approved" for a loan in a specific price range. It's important to have this letter before you make a contract offer to buy real estate. Once you're pre-approved, you know what price range of homes you should be looking at. So… what’s the difference between pre-approval and pre-qualified?

Pre-Approval (loan) – The mortgage company has performed an extensive in-depth review of the applicant. This may include credit checks, employment and income verification. This is the preferred method of mortgage approval for a buyer. It does not guarantee the mortgage, but it the next best thing.

Pre-Qualification (loan) – An estimate of how much you can afford for a monthly mortgage payment. Usually based upon the information you provide including credit reports and income verification.

Owner Financing

Lease/Rent with Option to Buy - With this agreement and Option Fee (or Premium) is paid at the beginning when the lease is signed. Usually the Option Fee is from 1% to 5% of the price of the property and is negotiable between buyer/renter and seller. This fee is NON REFUNDABLE, so when the lease/rental period is over and the tenant decides not to buy the property, this money is not returned to the tenant. When this arrangement has been made, the renter has essentially asked the seller to take the property off the market, and don’t sell it to anyone but them. It is the right, but not the obligation of the renter to purchase the property, but it is the obligation of the seller to sell it to the tenant. If the property market goes up, then the seller is risking the difference in value between the time they COULD have sold the property and when the tenant CAN buy it.

Owner may Carry - This agreement is very similar to a bank loan, except the owner is playing the part of a bank. A down payment is expected at the beginning of the agreement, and each payment is consists of Principle and Interest (P&I).

Rent to Own - In this agreement, each payment (or a percentage of it) will count as a payment for the property. Many times a down payment is expected at the begining of the rental period. At the end of the agreed upon period, the renter can purchase at the original listed price minus the rental payments (or percentage of them). If the renter decides to not purchase the property, then all payments belong to the owner, and the renter can basically just walk away.

Owner financing is usually a higher risk for the owner than for the renter, so you don’t see many of these offers. A down payment was made (or perhaps is partly made or carried), and is usually 10% to 20% of the purchase price of the house. The usual term is 5 years (but could be 3 to 30) with a balloon payment at the end of the period. The buyer may finance the balloon payment (as a bank refinance) at 4 years (as their credit may be stronger then), so they can lower the interest rate on the loan. Interest rates usually from 8% to 14% (or some may float at current rate +X%) for an Owner Financed property.

Owner financed property usually obligates the buyer/renter to not only maintain the property, but also to pay for any problems that occur (like the A/C breaks, the faucet leaks, etc.) during the financing/rental period. Some agreements may also require the buyer/renter to pay taxes and homeowner insurance in addition to the payments (just like a bank financed loan would require it).

When deciding upon any of the above financing arrangements, always ensure that a clear and concise contract is drawn up and you understand it thoroughly. A ‘home grown’ contract may not hold up and be as clear and understandable as a REALTOR Arizona Residential Real Estate Purchase Contract. Additionally, ensure you clearly understand how, when, and where the title is held and will be transferred.

Mortgage Terms

Adjustable - An Adjustable Rate Mortgage, or ARM, is a type of mortgage in which the interest rate is adjusted up or down, in accordance with current interest rate levels. The interest rates are tied to an economic index outside of your banks control, such as the Treasury bill rate. Your monthly principal and interest payment will fluctuate with these rate changes. Initially payments will be less than with a fixed mortgage, making this type of mortgage attractive to short-term buyers. Note: Inquire on the "cap", or maximum interest level your mortgage can reach, since it is possible for rates to raise significantly during the term of your mortgage.

Fixed - A fixed rate mortgage, on the other hand, uses both a fixed term (length of time) and fixed interest rate. At the start of the mortgage the rate and term are determined, and as a result the monthly amount for principal and interest payments remain constant for the duration of the mortgage. Fixed rate loans are more attractive to home buyers who plan on spending a long time in their home, or expect no major change in income.

Assumable - Sometimes homebuyers can find a loan which is "assumable." With an assumable loan, the current sellers lender is willing to transfer the existing loan to you, either at the previous interest rate or the current interest rate. Assumable loans are attractive to buyers because they usually require less paper work and less time.

Home Warranty

What is a home warranty?  A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home system components and appliances.

Why do I need a home warranty? Your home is most likely one of your biggest investments. Unexpected repair or replacement costs can easily strain your budget. Plus, finding an approved and insured contractor to solve your problem can be stressful and inconvenient. A home warranty cannot prevent systems or appliances from breaking down, but it can help make covered repairs or replacement easier and less costly.

Since your home is likely one of your largest investments — don’t trust the covered repairs or replacements to just anyone. Always ensure your maintenance and repair is performed by a licensed contractor. Check with your local BBB to see if there are complaints lodged against the company you are considering.

How does a home warranty work? When a covered item breaks down, request service by calling your home warranty service provider. Usually a service fee is charged for each visit then the rest of it is/could be covered by the home warranty company.

Home Warranty Companies
Old Republic Home Protection 800.445.6999 
ServiceOne Home Warranties 602.993.5911

Please Contact Us if you have any questions or need assistance.