Arizona Home Buyer's Guide
Buying a Home is a BIG Commitment: Ask Yourself, Am I Ready?
Step 1 Evaluate and Prepare
To buy a home you will need to have funds for the Earnest Money, a Down Payment, and the Closing Costs. Begin the Arizona home buying process by speaking to a lender so you know what you can afford and which loan is right for you. Then explore areas in your price range.
Here's a handy Phone App to you can use while driving through neighborhoods you like. It will give you an idea of the areas home values so you'll know if it's in your price range.
The Arizona Buyer’s Advisory is a useful resource to learn the pros and cons of different area.
Be sure to call your Sonoran Sky Real Estate agent early in the process for help discovering areas in your price range and to set up a customized home search so you can keep an eye on the market.
First Time Buyers
If you are a first time home buyer and totally new to the process, here are some things to consider.
Examine your current situation and ask yourself these questions:
- Is buying a home the right decision for you? Use this handy calculator from NerdWallet to help you decide if buying will be more beneficial than renting.
- Are you financially ready to buy a home? If not, creating a budget to allocate your income is a good place to start.
- Are you planning any major life changes that could impact your finances? Things like changing jobs or starting a new business, getting married or starting a family
- Can you commit to living in a home for at least 5 years? Building equity largely depends on market conditions; in a normal market it takes time to recoup the expense of buying a home. Knowing you can stay makes it less likely you’d have to sell in a down market.
- Is your job and income steady and stable? How is your credit score? You need at least 2 years of a steady job and income history to get most loans. Some home buyers are just out of school and/or choose to live debt free so have no FICO score since they are not on the radar of credit agencies. If you do not have a FICO score, you've recently graduated or changed jobs, talk to a good lender about getting a loan based on your bank account, schooling or past job history. Contact Sonoran Sky Real Estate for quality lender referrals.
- Know your FICO score Currently you can get a FHA loan with a FICO score of 600. That’s lower than it’s been in years.
- Do you pay off credit card and other debt quickly? Keeping your Debt to Income ratio (DTI) low will help you qualify for a better mortgage. Typically, a lender will want to see your DTI around 45% with the new mortgage added.
- Do you need to raise your FICO score? A good lender can help you find ways to raise your credit score that are far more beneficial than going through a debt company. Talk to one a quality lender before you make any moves, especially opening or closing credit cards.
- Does your budget include putting money aside for an emergency fund? Whether you rent or buy, it’s wise to have at least 3 months of living expenses set aside.
- Do you have money saved for a down payment and closing costs? Depending on the loan most folks will need at least 3.5% down. Putting 20% down allows you to waive the loan insurance, which will save you money! And of course, the more you put down the more you'll save on interest. You'll also need to cover the closing costs which are about 1-1/2% to 3% of the purchase price.