The luxury home market follows similar trends as the real estate market as a whole.

That said, it also presents its unique challenges – and opportunities.

“In a volatile rate environment, it pays to think beyond a standard 30-year fixed mortgage,” said Cameron White-Ford, vice president of mortgage sales at Elevations Credit Union. “The security of a 30-year fixed mortgage comes with a higher cost, especially when buyers are less likely to have that loan five years from now.”

Instead, White-Ford recommends potentially looking at adjustable-rate mortgages that provide the security of a fixed rate for the first five to seven years of the loan. 

“Why pay more for a loan you will likely refinance?” White-Ford asked.

In the meantime, White-Ford recommends exploring buy down options – at least for some.

“This allows you to pay for a lower interest rate over the first one to three years by using the funds set aside in an escrow, even if you refinance within the first year,” White-Ford said.

Of course, technology has had a dramatic effect on the entire real estate market as well. Compared to previous years, the process has sped up in recent years. 

“To beat the competition, buyers must be able to know the max they can offer and have their financing lined up on a Saturday night, for example,” White-Ford said. “Ten years ago, it could wait until Monday. Today, everything must be done the same day, regardless of the day of the week.”

In an effort to help buyers navigate this new, fast-paced world, Elevations rolled out a mortgage visualization tool called Trailhead.

“Trailhead empowers our borrowers to determine the best fit for them in terms of price range, loan products and offers on specific properties,” White-Ford said. “With Trailhead, they can adjust their type of mortgage, buydown options, maximum loan eligibility and other factors, see how this impacts their payments and find the options that work best for them.

“They can also generate a pre-approval letter for their offer, all online from home.”

And when it comes to investment strategies as well as renovations on luxury properties, strategies have also changed for this volatile, ever-changing market.

“Changes in the tax code, the prominence of organizations like Airbnb and changes to mortgage guidelines mean that luxury homes purchased as investment properties are now doubling as luxury second homes,” White-Ford said. “This has improved luxury home mortgage rates and lowered the down payment requirements.”

White-Ford went on to say renovation loans are available and, if customers have a rate they’re happy with on their first mortgage, they should avoid tinkering with that and instead take advantage of home equity lines of credit or, for larger projects, a home equity loan or even a construction loan.

So, if you’re looking to purchase a luxury home or simply make improvements to your current place, plenty of options are in place to help get you there.  

By Ross Maak, At Home Luxe