2 Tips for the Luxury Home Buyer
If terms such as Art Deco, Italianate, Federal colonial and mid-century modern are floating around in your head, the chances are good that you’re considering purchasing a luxury home. Knowing the fine points of architectural styles is one thing, understanding the differences between the luxury home purchase process and that of lower-priced homes is something else. There is a huge difference and you’ll need to know the nuances before making one appointment to view a home for sale. Whether you dream of purchasing a Palladian home or a Tuscan-styled villa, you will quickly learn that the devil is in the details. Let’s take a look at two of these.
We’ve all read about wealthy foreign nationals that come to America and pay for ridiculously expensive homes using all cash. Not all luxury homebuyers have or want to spend cash for their homes, however. If you are among them you’ll need to obtain a mortgage. Jumbo loan requirements differ from conforming loans in several ways. First, you may need to come in with a larger down payment, typically 20 percent but perhaps as much as 30 percent of the purchase price.
Jumbo lending is slower as well. There’s additional documentation required from the borrower and the lender may request more than one appraisal of the property. To speed the process along, gather up all of your financial documents before visiting the lender.
- Asset statements
- Tax returns
- Proof of cash reserves
- Employment verification
- Profit and loss statement
- K-1s and 1120s if you own more than 25 percent of a corporation
Your lender will let you know exactly which documents to bring, but if you have everything in a handy location it will save time.
If you will be paying cash for the home, have it appraised anyway. It’s the only way you’ll know for sure what the home is truly worth and that you aren’t paying too much.
Take your Time
High-end homes offer amenities and detailed design features that lower-priced homes lack. The state-of-the-art security system or the mechanical systems (such as an elevator) may require an inspection by a luxury home specialist or a contractor. Luxury homes are substantially larger than other homes as well, requiring more time for inspections and appraisals. Have patience with the process and take all the time required to ensure you are satisfied with the purchase. The late Victor Kiam said that “Information is a negotiator's greatest weapon.” This is never truer than in a complicated real estate transaction such as the luxury home purchase.
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