Home Loans-Scottsdale, AZ
The city of Scottsdale, AZ, which is a part of the greater metropolitan area of Phoenix, is a beautiful area for homeowners to live in, and the real estate industry here is booming. Moving to this city can be the resolution to the American dream of homeownership. There is a reason why it was voted the top city in the country to raise a family in 2014.
Though affordability may be a cause for concern when you are looking for a new home, the right loan program at District Lending can help you purchase your dream property in Scottsdale, AZ.
Types of Loans
First, you should know that not all mortgage loans are the same. You may qualify for various loan programs depending on your life circumstances, such as veteran status, income, credit score, financial assets, and previous ownership. The money that you borrow via home loans must be paid back to the lender along with interest.
District Lending is a Scottsdale, AZ, mortgage lender that can provide the right type of loan that you need for your purchase.
Conventional/Jumbo Loan
Conventional loans are any mortgages that are not guaranteed or ensured by a government entity such as the Federal Housing Administration or the Department of Veterans Affairs. Most conventional loans are backed by two non-government organizations known as Fannie Mae and Freddie Mac.
However, if the loan amount for your home in Scottsdale, AZ, exceeds the limit set by these two entities, it is known as a jumbo mortgage and is not backed by any organization.
FHA Loan
An FHA loan is backed by the Federal Housing Administration. This type of loan has lower standards for approval than a conventional loan, including a lower credit score requirement, higher debt-to-income ratio allowance, and lower interest rates.
VA Loan
A VA loan is only open to eligible veterans, active-duty service members, and surviving spouses. The Department of Veterans Affairs subsidizes these home loans so that there is no down payment requirement, no mortgage insurance premiums, and lower interest rates.
Factors That Affect Your Scottsdale Home Loan
When you request a home loan in the state of Arizona, multiple factors will determine the cost of the loan, the length of the loan, and the various components that directly affect your monthly payments. Understanding this list of elements can give you a clearer picture of how you will afford a new home in Scottsdale, AZ.
Down Payment
The money that buyers are willing to pay upfront for homes is known as the down payment. The more people pay upfront, the lower the cost of the loan will be. Your down payment will also affect whether or not you have to pay for mortgage insurance.
For example, conventional loans require a minimum down payment of 20% to waive the addition of insurance premiums to your total loan cost. Plus, home value in Scottsdale continues to climb each year, so you can build equity faster with a larger down payment and property value appreciation.
Credit Score
Your credit history can show lenders how reliable you are at paying back debt. Those with lower scores may find that they cannot obtain competitive interest rates because the lender is taking on risk by loaning them money.
However, if you have a higher credit score in the 700s, you can access lower rates to reduce the cost of the loan and your monthly payments.
Debt-to-Income Ratio
Every lender in Scottsdale, AZ, wants to avoid lending money to risky borrowers. The lender needs to know if a borrower is capable of paying the monthly premiums, and one of the measurements that will be used to assess the borrower’s capabilities is their debt-to-income ratio. This is exactly what it sounds like.
If your debt-to-income ratio is high, then you are considered a risky borrower because you have limited resources. Generally, lenders want to see a DTI of 36% or less for conventional loans, though exceptions could be made even up to 50%.
Closing Costs
Closing costs are often overlooked by borrowers who are just excited to move into their new homes in the consistently sunny city of Scottsdale, AZ. However, taking the time to understand what closing costs are can prevent any surprises when it is time for a decision.
Expect fees for attorneys, loan creation, licensed realtors, title searches, property transfers, and more to cost about 3-6% of the total cost of the loan.
Closing costs are typically shared between the buyer and seller, with some being fees being paid only by one party and others being paid by both. It all depends on the terms of the agreement.
District Lending: The Scottsdale, AZ Mortgage Lender That Can Meet Your Needs
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Want to gain a better understanding of how you can afford a home in Scottsdale, AZ? Ask for a credit-check-free quote from District Lending to get a more concrete picture of your goals.
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Multiple Loan Programs
Whether you are struggling to see how your financial situation can lead to homeownership or you are not sure if you qualify for certain programs, we will talk through your options. We can also inform you about payment assistance programs like HOME Plus for down payments or the Home in Five Advantage program for low-income families.
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You can visualize the various aspects of mortgage payments in Scottsdale, AZ, with our mortgage calculator. Test out different scenarios by adjusting the interest rate, down payment, insurance costs, loan amount, loan term, and more.
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