How to Buy a House in Arizona

How to Buy a House in Arizona

Arizona is one of the hottest real estate regions in the US (literally and figuratively). Not only does the state offer a stable economy, fantastic educational institutes, great travel links, and a diverse landscape, there are also numerous tax incentives here, making it attractive for investors and home buyers alike. Just check out some of the latest Arizona real estate market trends if you don’t believe us.

Buying a house in Arizona is therefore a smart decision, both from a financial standpoint and emotional standpoint as well. There are, however, plenty of legal stumbling blocks and obstacles that you’re going to need to overcome. That shouldn’t stop you from buying a house in Arizona, it just means you need to know some of the steps to buying a house in AZ. 

To make your first Arizona house purchase as simple and straightforward as possible, here is our “How to buy a house in Arizona?” guide.

Financial Preparation for Buying a House in Arizona

Of course, when house hunting in Arizona, before you can begin viewing properties, you need to have a realistic budget in mind. Assess your current financial situation and figure out what you can realistically afford to pay for a home. 

One of the biggest expenses is going to be the down payment. This is basically a percentage of the home’s purchase price. When you close the deal, you pay this up front. This is almost like your own investment in the home. The more you put down, generally the more favorable the Arizona mortgage lenders will view you. 

As down payments can get costly, the good news is that down payment assistance programs AZ are very much a thing. The state of Arizona offers first-time buyers a down payment assistance program. This low interest loan helps first-time buyers pay money upfront, as well as closing costs. 

Just be aware that credit scores can affect your eligibility for these loans and programs, as the lenders need to trust that you can pay your installments, interest and all, on time. Improve your credit rating by paying off any credit in full, not missing payments, and demonstrating the ability to manage your funds. 

a couple consulting with a realtor to for preparing the financials to buy a house in Arizona

What are the Steps to Buying a House in Arizona?

For those looking to buy a house in AZ for the first time, there are a number of steps that you will need to take. These include: 

  • Set a budget 
  • Decide on a location 
  • Approach Arizona mortgage lenders 
  • Save for a down payment or see if you qualify for down payment assistance programs AZ 
  • Pre-qualify for a mortgage 
  • Source the best real estate agent or broker you can 

House Hunting in Arizona

When searching for a house in Arizona, it’s important to be open minded. Finding your dream home can take a while and requires a lot of patience. Look into different areas, don’t be afraid to wait for the market to improve, and be sure to find a reliable real estate agent. 

What is the Current House Market Like in Arizona?

Arizona is a very desirable part of the country, and the house market here reflects this. The median home price is currently $433,200. This marks a year-on-year increase of 6.7%. 

Of course, values differ around the state, with some areas performing better than others. Phoenix is currently ranked the best, whereas Paradise Valley is one of the lowest. 

Finding Your Ideal Mortgage

Of course, when buying a house in Arizona, you’re likely going to need to find a mortgage. The good news is that there are several different types of mortgages offered by Arizona mortgage lenders. 

Conventional Mortgages 

Conventional mortgages are popular with first-time buyers. They’re backed via private lenders, rather than federal governments. They offer low interest rates, flexible repayment schemes, and can be used for first-time buyers, second homes, investment properties, and vacation properties. 

The downside is that some are subject to stricter requirements. 

FHA mortgages 

For first-time buyers, FHA (Federal Housing Administration) loans are ideal as they allow buyers to purchase a home with lower down payments of as little as 3.5%, along with poorer credit ratings. 

There are MIPs (mortgage insurance premiums) attached to these loans, as there are with conventional loans. 

VA mortgages 

VA (Veteran Affairs) mortgages are similar to FHAs, except in order to qualify, you must be a veteran, a surviving spouse of a veteran, or an active service member. 

With these loans, unlike FHA mortgages, you don’t require a down payment, nor are you required to pay MIP or a mortgage insurance premium. 

Beforehand, you will of course need to go through a mortgage pre-approval process. Typically, valid for 60 – 90 days, this highlights how the lender has checked your credit and employment status, and figured out an estimate of what you could realistically afford to pay on an AZ home. 

a couple looking at online listings for buying a house in Arizona

How Much Do I Need for a Down Payment in Arizona?

How much you need for a down payment will depend on which mortgage you have opted for, and whether or not you’ve used down payment assistance programs AZ. 

If you use an assistance program for example, you would need as little as 3% upfront. With an FHA, you’d be looking at a very reasonable 3.5%. 

Are There Any First-Time Homebuyer Programs in Arizona?

Just like we previously looked at, Arizona offers a number of first-time homebuyer programs and grants, including the down payment assistance program, as well as 30 year fixed-rate mortgages with a DPA (Down Payment Assistance) grant. 

Needless to say, as far as the steps to buying a house in AZ are concerned, you can see why the state is so attractive to first-time buyers looking to get on the real estate ladder. 

Negotiation and Making an Offer

When you do come across your dream home, the next step is to make an offer and then negotiate a final price. When making an offer, be sure to offer a realistic, yet competitive offer. By all means offer below the asking price, but don’t go too low. 

You could consider an earnest money offer. This is a deposit made to the seller to demonstrate that you’re serious about the home. Again, be realistic about how much of this deposit you can afford. 

Escrow and Closing

After making an offer, having it accepted, and gone through the paperwork ECT, all that is left is to close. This is where you’ll need an escrow officer. 

Escrow is basically an agreement between the buyer and seller whereby the money will be entrusted to a third-party (escrow officer) until all specific requirements and criteria are met. The escrow officer oversees the terms of the contract and ensures that both parties have honored them. 

Once the terms of the contract have been met, the sale can close and the escrow officer can disburse the money equally. 

What Are the Closing Costs Associated with Buying a House in Arizona?

When closing a sale, there are a number of costs that you will need to factor into the equation. These include things such as real estate fees, agent fees, marketing fees, Escrow officer fees. 

For buyers, typically these closing costs will be between 2 – 5% of the home’s purchase price. Again, be sure to factor this into your budget.

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