Everything You Need to Know About Buying a House in Arizona
Arizona’s appealing weather, variety of communities, and lower property taxes make it an appealing place to buy a home.
Table of Contents
- Figure out your finances
- Get preapproved for a mortgage
- Look for a house
- Make an offer
- How to save on homeowners insurance
- FAQs
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Living in
Arizona
is appealing to many because it means being close to natural wonders like the Grand Canyon and reliably sunny weather. As an Arizonan, you won’t have to worry about snowy winters, and you can enjoy a rich variety of desert, forest, and canyon oases.
But like the state’s summer weather, the Arizona housing market is hot, and the right home can be hard to come by. Over the last year,
Arizona’s home values have risen by 30.9%
. This can make entering the housing market seem daunting—especially if it’s your first time buying a home.
But it doesn’t have to be! That’s why
car
and
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broker and comparison app
Jerry
is here to tell you what you need to know about buying a home in Arizona. Read on to learn about the steps of financing a home in Arizona.
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Figure out your finances
The first step to buying a home anywhere is to figure out what you can afford. Before you dive into house-hunting, you should get a good sense of your debt-to-income (DTI) ratio, where your credit score stands, and the many payments and extra fees that come with a house purchase.
Feeling lost? If so, don’t worry. We’re about to break these down further.
Check your credit score
Your
credit score
is a major factor in determining whether or not you’ll be approved for a mortgage, as well as what kind of rate you might qualify for.
While there are still mortgage options for those with low credit, conventional loans commonly require a credit score of
at least 620
.
If your credit score is lower, you might still qualify for a loan based on other factors. Even if you don’t, you can choose to wait on buying a home and focus on improving your score first.
There’s also the option of using a
Federal Housing Administration (FHA) loan
, which allows credit scores as low as
523
. If you’re a veteran or active service member, you also have the additional option of a
Veterans Administration (VA) loan
, which requires a minimum score of
500
.
Calculate your debt-to-income (DTI) ratio
When it comes to qualifying for a mortgage, another extremely important factor is your
debt-to-income ratio (DTI)
. Your DTI is essentially what it sounds like: a ratio of your total debt to your total income.
计算你的DTI,找到你的总蒙特hly payments that go toward debt, then divide them by your monthly income (before taxes).
-
Student loan payments
-
Car payments
-
Credit card payments
-
House payments
-
Personal loan payments
-
Child support or alimony
Ideally, you want your DTI to fall
below 36%
. If your DTI is higher, you may face higher interest rates, or your application might be outright declined. If your DTI is
over 50%
资格申请抵押贷款可能exceptionally difficult.
Determine your down payment
How much you’re able to put toward a
down payment
has a major impact on the price range you’ll be able to afford. How large of a down payment you’ll need depends on your mortgage.
Some mortgage options might allow you to make a smaller down payment, like
5%
of the purchase price, but require that you pay private mortgage insurance (PMI), which would increase your monthly mortgage payment. It’s common for a conventional mortgage to require you to put down
20%
, which, if you’re able to do so, can help you avoid needing PMI in most cases.
The average Arizona home value is $401,355, according to Zillow’s home value index. Homes in Arizona commonly sell for between $300,000 to $400,000, meaning a 20% would require $60,000 to $80,000. Saving up that kind of cash isn’t easy, especially if you’re a first-time homebuyer.
Mortgages with lower down payment options are out there, however. Here are a few of them:
-
Private lender options: Lenders may offer mortgage options with lower down payment requirements, but they often come with PMI to protect the lender in case you default on your payments.
-
FHA loan: This mortgage is insured by the Federal Housing Administration for homebuyers with low to moderate incomes, which often includesfirst-time homebuyers. The minimum down payment requirement is 3.5% .
-
VA loan: This mortgage option is insured by theVeterans Administrationand is available to veterans and active service members, as well as eligible surviving spouses. As long as the purchase price isn’t higher than the home’s assessed value, no down payment is required . You can also take advantage of their lower interest rates and closing costs .
Prepare for closing costs and other fees
Down payments are usually the major up-front cost when you’re purchasing a home—but it’s not the only expense you’ll be responsible for. You’ll also have to take care of fees and other closing costs.
Closing costs in Arizona on average range from 1.05-1.4%, with the
average closing costs
coming to $4,190.34.
What closing costs include can vary, but it frequently includes the following:
-
Mortgage origination fee
-
Home appraisal fee
-
Property taxes
-
Home inspectionfee
-
Homeowners insurance
-
Credit report fee
-
Realtor fee
If you’re using a VA loan, you may be required to pay a VA funding fee, which would be paid at closing. The cost of the fee depends on the type of loan you use and its total amount.
Property taxes will vary depending on your city and county, but on average, the statewide average for Arizona property tax rates is
0.62
%.
Look for homeowners insurance
Homeowners insurance is a factor that has a significant impact on your long-term homeownership costs. In the United States, the average cost of homeowners insurance is about
$1,300 per year
.
To get the best rate you can on homeowners insurance, it’s a good idea to
seek out quotes from
multiple insurance providers
, then compare the costs and coverage options. If you bundle with other policies, like your car insurance, you can save even more.
Pro-tipJerrycan help you make quick work of gathering multiple quotes from more than 50 top insurance providers!
Key Takeaway Knowing where your finances stand before starting the home-buying process is essential. Consider your credit score and DTI, as well as what you might be able to afford for a down payment and closing costs.
Get preapproved for a mortgage
Before you
officially
start looking for houses, you’ll want to get
preapproved for a mortgage
. This will give you a better sense of what price range you’ll qualify for and leave less room for surprises later.
Being
preapproved for a mortgage
also tends to help sellers take your offers more seriously, and some may even require preapproval before showing you their property.
A word of advice though,
don’t get a preapproval until you know you’re ready to buy a home
! Getting preapproved for a mortgage requires a
hard credit check
. Your lender will look at your DTI, credit score, and other factors regarding your financials and employment history.
If you change your mind about buying or realize you’re not financially ready to buy, your credit score could take a hit and potentially make it more difficult to get approval later on.
Many financial experts will recommend seeking out about three preapprovals to weigh your options since multiple applications within a certain window of time won’t additionally affect your credit score.
Key Takeaway Before seeking preapproval for a mortgage, know where your financial state stands. Then, get an idea of what kind of mortgage you want to seek out, and from which lender(s).
How to pick the right mortgage in Arizona
With conventional loans, common mortgage terms are
15 years
and
30 years
.
30-year mortgages will have lower monthly payments, but you’ll pay more in interest over time, and they can also come with higher interest rates.
Mortgage
terms and interest rates can vary depending on the lender, which is why it’s a good idea to consider multiple options before settling on one.
Pro-tip: Just because a lender approves you for a mortgage up to a certain amount doesn’t necessarily mean you can afford it . Consider other expenses outside DTI that your lifestyle requires before settling on a top limit for your budget.
Look for a house
Here’s the part you’ve been waiting for! Once you’ve finally been able to jump through the previous hoops, you can start the search for your new home.
Pick your city or neighborhood
First, settle on a location that will fit your lifestyle, as well as your budget. Think about a city’s
climate
,
atmosphere
,
things to do
, and
cost of living
.
Many of Arizona’s cities aren’t super walkable, so you’ll likely have to rely on public transportation or drive your vehicle (in which case you’ll also want to consider the costs of
car insurance
policies).
Buyer’s market vs. seller’s market
Whether you’re house-hunting in a
buyer’s or seller’s market
will affect how much bargaining power you’ll have when it comes to negotiating a sales price.
-
In a buyer’s market , the supply of homes for sale outnumbers buyers, which usually gives you more negotiating power when you’re ready to make an offer on the right home.
-
In a seller’s market , the opposite is true: the number of homes for sale on the market isn’t enough to adequately meet demand. In a seller’s market, buyers will often need to make offers quickly when they find the right home , and bidding wars among multiple prospective buyers are common.
At the moment, like the majority of the United States,
Arizona is very much a seller’s market
. If you’ve found the right home at the right price, it’s a good idea not to wait too long before making an offer.
The housing market is always subject to change, so that’s not to say it will stay a seller’s market forever. For that reason, it’s good to keep tabs on the market for signs of change. Here are a few helpful things to keep an eye on:
-
Monitor recent home sales . In a seller’s market, sales prices will be at or higher than the initial asking price.
-
Pay attention to how long homes stay on the market . In a seller’s market, they won’t stay listed for long, but in a buyer’s market, house listings can linger for months.
Find a real estate agent
While it’s not necessarily required, working with a
real estate agent
can be extremely helpful as you navigate the Arizona housing market.
As you search for an agent, look for someone who has proven experience in your desired location, and who communicates with you clearly and promptly. Pay attention to customer reviews, too. You want to focus on buying a reliable home, after all, not worrying about whether you can rely on your realtor.
Make an offer
You’ve found your dream home! Now, it’s time to make an offer.
A real estate agent will work with you to handle the related paperwork, determine a solid offer, and make any requests of the seller.
The seller will have a certain amount of time to consider your offer before they’re required to respond. Once the seller accepts your offer, you’re just steps away from settling into your new home!
How to save on homeowners insurance
As you start adding up the costs that come with buying a new home, you’ll want to start looking for savings wherever you can. When it comes to saving on your
8888beplay
,
Jerry
can help you!
With Jerry, you can make quick work of searching for the home insurance policy that will give you and your new investment the right amount of protection. Jerry will show you competitive quotes from top insurance providers so you can quickly and easily compare your options in one spot.
They can even help you
bundle with your car insurance
for further savings! Once you’ve picked the right coverage for you, Jerry can help you set up your new policy and cancel your old one. Even better, it takes less than a minute to get started.
“Jerrywas wonderful! I used it for my auto and renters policies. I trusted it so much that I signed up for my homeowners insurance under Jerry as well. All of the agents are amazingly nice and knowledgeable.” —Mary Y.
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