In part 1 we covered the first 6 subsections of the FINANCE section of the Arizona Purchase Contract. In this article we will address the remaining 5 subsections.
Please note that this article applies only to the Real Estate Purchase Contract in use in Arizona. For information on Real Estate Purchase Contracts in use in other states please check with the Association of REALTORS in each state.
2g. Type of financing – this is the subsection where the buyers indicate what type of financing they are planning to use. The type of financing here should be the same one identified in the Loan Status Report (LSR) discussed in part 3. Common types of financing are:
– Conventional – a conventional mortgage is any loan that is not guaranteed or insured by the federal government.
– FHA – these are loans insured by the Federal Housing Administration (FHA) and made by approved lenders following FHA specific guidelines.
– VA – these are loans guaranteed by the Veterans Administration (VA) made to a qualified veteran (according to VA criteria) and made by an authorized lender on an approved property.
– Assumption – these are loans that allow buyers to take the sellers place in the loan. Instead of obtaining a new loan, the buyers will be assuming the existing loan the sellers have.
– Seller Carryback – these are loans where the sellers agree to finance the whole or part of the purchase.
2h. Loan costs – defines who (buyers or sellers) will pay for the different loan costs and fees, including Private Mortgage Insurance (PMI); discount points; A.L.T.A. Lender Title Insurance Policy; Loan Origination Fee; and Appraisal Fee.
2i. Other loan costs – defines the maximum amount the sellers agree to pay in addition to the amounts already defined in subsection 2h above. This will limit the sellers’ financial exposure to the amount included here. Also, for VA loans, sellers agree to pay the escrow fee. And lastly it states that all other costs to obtain the loan shall be paid by the buyers.
2j. Changes – buyers are required to get written consent from sellers prior to making changes in the loan program, financing terms, or lender described in the LSR. However buyers are not required to obtain prior consent from sellers if the changes do not (1) adversely affect buyers’ ability to obtain loan approval; (2) increase sellers’ closing costs; and (3) delay close of escrow.
2k. FHA Notice – this subsection applies only to buyers using an FHA loan. It states that the Department of Urban Development (HUD) does not warrant the condition of the property. It also requires FHA buyers to attach a signed copy of the form HUD-92564-CN, “For Your Protection: Get a Home Inspection”.
Worthwhile investments naturally require careful analysis. Thus purchasing high country raw undeveloped Colorado, New Mexico, or Arizona land for sale is no exception. We believe that undeveloped land investment is one of the better ways to increase your financial holdings, but doing your research and due diligence remains vital to your success.
Here are a few questions to ask yourself about, for instance, Arizona land for sale.
1. What is the reason for this raw undeveloped land investment in the Arizona land for sale High Country?
This will determine the kind of Arizona land for sale you seek, its location, and price. For instance, you may plan invest in the Rim Country near Payson. You plan might be building a residential second home to escape the heat of the Valley of the Sun. Alternatively, you may want to buy Arizona land for sale in the high country only to hold the investment for a time as values continue to rise due to the many Californians moving in and paying California prices.
2. How can I get the information?
First, visit and become familiar with Arizona land for sale in the area, from Payson through Heber-Overgaard and Show Low-Pinetop to St Johns, Eagar and Alpine. While the fierce development may now be in the areas most readily reached from Phoenix and California, the entire region is likely to see major increases in land value in the next decade. Check the present and possible future zoning for the land to determine if your development idea will work with city and county plans, or to know what kind of value it might have should you want to sell to a future developer. Study the history, political and cultural make up of Gila, Navajo and Apache counties to understand just how they may react to the changes brought about by so many new residents.
3. How should you work with real estate professionals?
Do not choose just any agent. Raw and undeveloped Arizona land for sale investing is a real estate specialty, and you want to work with someone who is such a specialist and knows the likely future development of the area. I suggest that you work with several, compare their opinions and counsel. Even then, you may decide to buy directly from the owner rather than through an agency.
In the White Mountains, you will find a number of owners individually selling off their family property. These are often better deals than those offered through an agency. These are sometimes offered with owner financing.
You can talk to farmers and ranchers with Arizona land for sale. Be on the look out for tax sales and foreclosures, read the newspaper subdivision notices, research the Navajo and Apache county government websites, and generally immerse yourself in what is going on.
4. How do you choose a sub area?
Examine the rate of growth in Payson or Show Low versus outlying areas. The speed with which an area is developing will increase the speed of your appreciation, but you want to find the areas where prices of Arizona land for sale have not yet taken off.
The real estate industry is governed by local, state, and Federal laws and therefore varies not only from state to state, but also country to country with each having its slight differences. The following is meant as a quick reference guide for Canadians (currently buying in Arizona more than in other group) considering the Arizona market.
The number of Canadians investing in Arizona real estate continues to trend upward. And, it is extremely important for these investors to understand the key elements of finding the right property. Even though the housing market in Arizona for Canadians is particularly favorable, the property buying process is important to understand as it may differ slightly from the process north of the border. It is now more important than ever, especially since the market is so saturated with property, to know how to buy to get into a profitable investment property as oppose to a money pit.
The 4 key elements of finding the right property in Arizona are:
1. Method of Acquiring the Property
2. Property Use
4. Finding the Right Real Estate Company
These four key elements are not new concepts and have been practiced for as long as people have been buying property. The challenging part is being able to combine the knowledge of the market with understanding of which method should be used acquire the property. This article will provide a clearer picture into the how, what, and where of finding the right property in Arizona for Canadians taking a step forward and investing outside their home country.
The first key element is to determine which method will be used to acquire the property. Financing or cash? With the recent tightening of the US credit markets, the ability for Canadians to obtain financing to purchase US real estate has limited the number of banks offering the specific program needed. According to the National Association of Realtors (NAR) 2010 Profile of International Home Buying Activity Report, 34% of potential international purchasers were unable to complete a transaction due to financing problems. Typically, the more conventional options require large down payments and are limited to certain transaction types. There are some non-conventional options that allow for more lenient guidelines; however, the trade off is higher interest rates.
Although it is more challenging to obtain financing in Arizona for Canadians looking to purchase, there are options available. Another method used more commonly among Canadian buyers is cash. According to that same report by the National Association of Realtors (NAR), 55% of international purchasers paid cash. The majority of Canadian buyers use cash because it provides flexibility and since it is difficult to obtain financing. There are advantages and disadvantages to each method; however, it is important to pick the one that best fits the investment objective.
Once the decision has been made on how to acquire the property, the second element of finding the right property is to determine the best use for the property. There are really only two main options; second home or investment. According to the previously mentioned report by the NAR, 22% of all international buyers purchase their property as a vacation home for family and friends compared with 14% that use it as an investment. The numbers in Arizona specifically, trend a little higher toward the investment side… Closer to 20%. The use of the property will determine what type of property to acquire. Would you be looking to use their property as a vacation home or an investment home that is all about cash flow.
Its very important for Canadians to remember… How the property is going to be used sets the stage for what a Canadian’s strategy is when it comes to buying because the few programs available for Canadian borrowers may stipulate that the purchase is a second home and not an investment. Largely, Canadians who are buying with cash are drawing money from either their Canadian home equity or Canadian line of credit.
Once the use of the property is decided, the third element is determining the best location. The reason that the use of the property is so important when looking at location is that some areas of Arizona cater more towards vacation homes and recreation whereas other areas are more advantageous for investment properties and may not be where a family would want to spend its days. The popular vacation destinations are in resort-like areas, typically close to one of the many Arizona golf courses. These obviously tend to sell for more, since the areas are more desirable. A few examples of these locations are North Scottsdale or Fountain Hills. If one is looking for investment properties, then prime locations are lower priced homes with a high rent demand. These are typically located closer to the city. Examples are Tempe (near Arizona State University) or North Phoenix. A good real estate broker or agent can provide you with zip code maps which demonstrate rents or sales for a particular area based on zip code alone. A zip code is the same a postal code north of the border. And, Canadians looking to purchase should really develop a good working relationship with an agent on the ground in Arizona prior to buying or even visiting so that time and money is not wasted for either party.
The final element is finding the right real estate company. You will want one with experience working with Canadian buyers. Again, the market in Arizona is different. Look at what could happen if the right company is not chosen. Mis-representation, lack of market knowledge leading to buying a property in the wrong location, paying too much for a property, not identifying what property type that best meets the buyers needs from a mortgage or tax basis… the list goes on and on. But the biggest danger for Canadians is the belief that the real estate market in Arizona is similar to what they are accustomed to north of the border. It isn’t.
So, how is someone unfamiliar with the Arizona market supposed to find the right real estate company? There are several ways to locate real estate companies operating in Arizona. One good way is to speak to your local real estate agent in Canada. They may work with a larger agency that has branch offices throughout North America or have other buyers who have purchased property in Arizona. This is a great way to get feedback on the buyer’s personal experiences with these companies. Also, make sure that any company you work with has a good rating with the Better Business Bureau and Arizona Association of Realtors (AAR). Do the homework. It is much easier to do a little work upfront rather than deal with a potential issue later.
In closing, finding the right property in Arizona for Canadians looking to take advantage of this incredible real estate market may be right for you. Obviously, when it comes to real estate transactions there is no guarantee of a completely smooth event even after following the guidelines set forth in the previous paragraphs. However, following the advice of this article may allow Canadian buyers to minimize the potential issues that could arise and be prepared to deal with them so that they do not disrupt the end result… finding the right property in Arizona
With a presidential election that ended in a never-before seen way, it is almost impossible to focus on the underlying issues. However, the outcome of these issues represent state by state decisions that will ultimately affect thousands of Americans. Payday loan initiatives appear quite frequently on election ballots due to their strong controversial nature. Although debates and proposals have been given and displayed time and time again to help people understand the importance of the payday loan industry in America, it remains a negative part of our society.
What is the controversy? Simply put, payday loans are illegal in 15 states nationwide and it seems that many more states are following suit. While the majority of people say it is just another money hungry industry looking to trick consumers into paying unnecessary amounts of money, some people have come to understand the purpose of the lending business. Regrettably, the opposing side is composed of people who do not need and have never used the system and more unfortunately still, they are the vast majority of people who actually vote on these issues. Because most payday loan institutions are centered in low-income areas of the country, many view them as illegitimate businesses. The truth is they are there because they are needed. Most low-income consumers depend on payday loans to pay off their pending bills or simply to make ends meet on a day-to-day basis.
Arizona has become the most recent state to take charge against the payday loan industry. With annual percentage rates on loans reaching over 400%, many felt the need to step in. The truth is, the rate makes it profitable to the lender and affordable to the consumer. Problems arose only when the loans were used inappropriately. Many consumers misunderstood or did not follow the necessary steps to make an efficient and problem-free transaction. People who were opposed to the industry made the argument that their late-fees were unreasonable, when they are really the same as any other sort of loan, either from a bank or a credit union.
Since payday loans in Arizona face extermination in 2010, supporters of the industry took an opportunity to fight against this in the 2008 presidential election. Proposition 200, as it was called, offered a reasonable alternative. It included a substantial APR cut from $17.50 to $15 for every $100 borrowed. There would be repayment plans available and would eliminate roll-over charges if payments were not made on time. Lastly, it would only allow consumers to take out one loan at a time. While the plea was reasonable, the bill did not pass. 40.50% voted for it while 59.50% defeated it. Arizona’s payday loan industry faces extermination in 2010.
Over the past few years, Ohio has seen a rise in the payday loan industry, with institutions appearing in every corner of the state capital. Earlier this year however, it became the most recent state to pass a law regarding payday loans. The law (or Issue 5) put a 28% cap on percentage rates which, up to that point, had reached about 391%. The law also limited the amount of loans to four per year and capped payday loan institutions in relativity to Cleveland’s population. Although the initiative was said to be made with the intention to regulate the percentile rates, it has only made it impossible for the payday loan industry to exist. With a 28% limit, there is no room for profit and because of that payday loans have slowly diminished from the state of Ohio and over 6,000 people have been left without a job.
Ohioans for Financial Freedom, a payday loan representative group centered in Cleveland, Ohio, made it a priority to change the law. They spent over 16 million dollars and acquired 279,174 signatures to re-install Issue 5 on the 2008 presidential ballot. Their goal was to get enough voters against the proposition and therefore re-instate the 391% APR and unlimited access to payday loans every year. Alas, it did not pass. 64.55% of voters approved the issue, while only 35.45% defeated it. Without a doubt, the payday loan industry will not be around for much longer in the state of Ohio.
There is a general misunderstanding about the payday loan industry. Truthfully, the majority of state legislators prefer the regulation rather than the elimination of payday loans. Their argument is that if a profitable yet reasonable agreement can be made between the industry and the rest of the country, it can be a valuable part of our society.
Building homes in Phoenix, Arizona is a very different process than purchasing a home already constructed. When you buy a finished home, even if it’s a home under construction by a developer, you don’t have to worry about special financing. But managing your own construction is a little different.
There are some fabulous lots available for homes in Phoenix, Arizona. For homeowners that want to build a custom home, the mountains and desert vistas offer an amazing backdrop for a custom, luxury home. But custom homes require a little advanced financial planning.
Building a home requires slightly different financing. Most people finance their building process with a construction loan. These loans have milestones that must be met before some of the funds are available. Usually, these funds are kept by the lender until each step of the building process is completed.
While building a custom home is one of the most exciting steps in home ownership, it requires advanced planning. Most of the planning concerns how you are going to meet the financial expenses needed to complete the home. When you are building your custom home, there are different expenses to consider.
* You may need money for a down payment on the land and you need funds for the closing costs of the loan.
* You may need money for loan payments and taxes.
* You may need funds for an architect, for the house plans, for permits and licenses.
* You may need to continue to pay your mortgage payments or rent and homeowner’s fees.
* You may need additional funds for material upgrades. All too often you’ll find better flooring, appliances, or unique kitchen cabinets – all of which require cash up front to place into your new home.
* You will need to plan for project cost overruns. Even the most thorough home budget won’t eliminate project overruns. You should plan for your project to be at least 10% to 25% over budget, at a minimum.
It’s possible to build your dream home, especially when it’s in a remarkable environment like Phoenix, Arizona. But it does require a little planning and probably a little savings or money in the bank. Once you’ve finished planning and begin the construction process, you’ll have a home that is just as unique as you and your family. Imagine how you’ll feel when your house is done. All that planning and saving will pay off when you are living in your dream home in Phoenix, Arizona.
Gary Ogami has over 13 years experience working in the financial services industry. He has worked with hundreds of individuals and families to find mortgage options that work for them.
He prides himself on making the mortgage process as easy as possible for his clients and is very passionate about helping them save money and develop a strong financial foundation.