Arizona Home Buyer's Guide
Buying a Home is a BIG Commitment: Ask Yourself, Am I Ready?
Step 1 Evaluate and Prepare
To begin the home buying process, you’ll want to tour the cities and towns you are interested in living.
Explore areas using this Phone App to see available homes for sale so you get an idea of prices in various communities. If you visit an Open House, be sure to tell the host your are working with us.
And do use the Arizona Buyer’s Advisory to learn the pros and cons of different area as well as what to look for, and avoid, when buying a home.
Be sure to call your Sonoran Sky Real Estate agent so we can setup a customized home search where you’ll be able to view listings of homes for sale as soon as they hit the market. Keeping a watch on prices and availability will help familiarize yourself with local markets.
Before you are ready to make an offer on a home, you’ll need to have your ducks in a row.
Examine your current situation and ask yourself these questions to evaluate your readiness to buy a home
- 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? It takes time to recoup the expense of buying a home, and building equity largely depends on market conditions. 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? You need both to get a loan. Some people choose to live debt free, so they have no FICO score since they are not on the radar of credit agencies. If this is you, talk to a good lender about getting a loan based on your job history and income alone.
- Know your FICO score Currently you can get an FHA loan with a FICO score of 600. That’s lower than it’s been in years.
- Do you pay off your credit card 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 amount calculated in.
- Do you need to raise your FICA score? If so, do you have a plan? A better score means better options for loans. Dave Ramsey is a talk show personality with some good ideas of how to become debt free. His first step is to make cash only purchases. Next, he advocates listing all debt in order from the smallest amount owed to the largest. Then, when paying bills make minimum payments on all but the smallest debt, for which you throw everything you can at it until it's gone. Repeat the process for each amount thereafter.
- 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 you’ll need between 3.5% to 20% for a down payment. Of course, the more you put down the lower your monthly payment will be and the more you'll save on interest. Closing costs are about 2% to 3% of the purchase price; often these can be rolled into your loan.
- How are you at home repairs? Sure, homeownership means no landlord to tell you what to do, but also there’s no landlord to fix things when they break. Being handy helps. YouTube has a wealth of how-to videos for simple repairs. A good home warranty company can be helpful, as well as that emergency fund you put together.