Buying a luxury home is a dream for many across the US. These homes offer the best amenities in prime locations. Typically a luxury home uses top of the line materials throughout and has the latest in terms of appliances and technology. However, these homes also typically come at a much higher price point than other homes in the area. Buying a luxury home can be a big financial decision. If you are considering buying this type of home, here are three things to keep in mind.
They Are More Expensive
The cost of a luxury home will vary drastically depending on where you live. In highly populated urban areas, luxury homes will typically be far more expensive than they would be in areas where land prices are not as high. On average, the starting price for a luxury home is around $2.2 million. However, it's important to note that location will have the biggest impact on the overall price of a luxury home. Either way, you can expect to pay more for a luxury home than you would for a non-luxury property in the same location.
A Real Estate Agent Can Help
Another thing to consider when buying a luxury home is that the services of a real estate agent can be invaluable. Often, luxury homes are not listed in the same manner as other properties and open houses may be few and far in between. A real estate agent who specializes in luxury properties can help you find the right luxury home for your needs. A real estate agent will be able to show you multiple luxury homes for sale in your area. Typically, there isn't as large of an inventory for these types of homes so it helps to have a real estate agent on hand to show you your options.
Financing Can Be Different
Financing for luxury homes is typically different than financing for less expensive properties. Due to their more expensive price points, buying a luxury property may mean stricter lender requirements. Often, in order to purchase a luxury home, a jumbo loan is needed. These loans are used for homes that cost more than $484,350. With a jumbo mortgage loan, a credit score of at least 700 is required. Most lenders will also require down payments of 20 percent, though some may go as low as 10 percent. Your debt-to-income ratio will also need to be less than 45 percent.
If you are buying a luxury home, there are a few things to keep in mind. First, these homes are typically more expensive than other homes. A real estate agent can help you find the right luxury home for your needs. Financing these homes is also different and will typically require a jumbo mortgage loan.