Buying An Arizona Home – Where To Start?

Buying an Arizona Home – Where To Start?

Nowadays – 2011 – most home buyers start their home search online. This is unlike how our parents and grandparents did it. Today, we have access to homes for sale on the Internet and we can get mortgage rates in just a few clicks with our mouse. In our parents day they had to contact a real estate agent to show them paper copies of homes for sale and they had to go down to the bank to physically speak with the local banker. With this said, here is a brief list of some of the steps you might consider taking if you are looking at buying a home.

  • Determine your financial position first
  • Determine a wish list for your home.
  • Pick a real estate agent

Determine your financial position first.

Believe it or not, buying a home doesn’t start with a real estate agent, it starts with conversations with mortgage lenders. You must determine what kind of loan program you can qualify for and what home price you can afford. Are you going to take advantage of low VA rates as a VET or use an 203K rehab loan from FHA? Are you going to pay points or how much downpayment will you need? How does your credit look?

Determine a wish list for your home.

It helps to determine what you want in a home before you start looking. You waste a lot of time looking at homes that don’t fit your needs – it can also be frustrating sorting through homes that are in your price range but don’t have what you want or need. Also, by putting together a list of things you want in your home you can help your real estate agent (once you pick one) get right to the types of homes best suited for you.

Pick a real estate agent.

There are a lot of steps to buying a home and real estate agents walk people through the home buyer process all the time. You don’t want to miss something as it may end up costing you a bunch of money and time. Once you get a sense of what, where, when etc. it’s time to hook up with a real estate agent. You’ll want to get an agent to represent you with submitting purchase offers and negotiating.

It’s Up To You

Do some snooping. With the Internet making home searches so easy, take some time to start looking around to see what’s out there. You need a real estate a lot less than you used to when it comes to looking homes for sale.

Hopefully this list will help you through the early stages of looking for a home.

Arizona First Time Home Buyer Mortgage Tips

Arizona First Time Home Buyer Mortgage Tips

You might have heard that getting a first mortgage can be a painful and time-consuming process. Well, except for constant changes in mortgage underwriting, your first mortgage doesn’t have to be as difficult as you think. Keeping in mind these few tips could make it an easy process.

  • Know What You Need
  • Down Payment
  • Ratios & Closing Costs

Know What You Need

Know how much you can borrow versus how much you want to borrow. You need to take this into consideration whether you’re using a VA loan, an FHA loan, or a conventional home loan. Your financial outlook, among other factors, determines the amount for which lenders will approve your home loan. Always remember, however, that you don’t have to borrow the entire amount, even if you qualify. In fact, a good tip to remember is to tell your real estate agent what your house price range is, if it is lower than the loan amount you have been approved for, so you can find a home that meets your needs and also has a price below your loan qualification amount.

Down Payment

Make your down payment as large as possible. Even if you are buying home with a no-down-payment VA home loan or a 3.5% FHA mortgage, don’t forget that the larger your down payment, the less you will have to borrow. The less you borrow, the more money you save. Not only that, but if you can put 20% or more down, you will not be required to buy mortgage insurance.

Ratios & Closing Costs

Know your ratios, the formulas that lenders use to qualify you for a loan. These formulas are called “debt-to-income ratios,” and there are two that are generally used. The “front-end” ratio is met when your mortgage payment is less than about 28% of your monthly income. When your mortgage payment plus the minimum payments of your other debts is not more than 36% of your monthly income, the “back-end” ratio is met. You may be able to exceed the front-end ratio if the back-end ratio is low, so looking for ways to reduce debt before trying to qualify for a mortgage is always beneficial. You need to know what your closing costs will be. Besides the monthly payment, buying a home involves other expenses such as an appraisal of the home, an inspection, title insurance, and maybe prepaid interest. That’s just a start. Not having enough money set aside for these expenses could cause a delay in closing on your new home. Ask your loan officer for help in determining your closing costs and other expenses.

Recap

Remembering these tips could make getting your first mortgage a painless, easy experience.

Three Challenges to Getting A Mortgage in 2011

Three Challenges to Getting A Mortgage in 2011

Unfortunately, for many people, getting a mortgage, even a VA Loan, in 2011 is still a challenge. Below what follows is a quick look at some of the most common challenges that mortgage applicants are facing as they try to qualify for a mortgage. The three most common problems in 2011 for getting a mortgage are: home values (appraisals), income sources, and employment stability. 

Below, I will look at each of these areas.

  • Appraised Values

  • Income

  • Income Sources

Appraised Values

No matter whether you are buying a home or are looking to refinance your current mortgage, the value of the property is critical to whether you can get a mortgage or not. Home values in many parts of the country are still well below the values they were several years ago which is where many current home owners get into trouble. With sagging home values many homeowners around the US are finding it nearly impossible to refinance because their mortgage balance far exceeds their home’s value. With this as the case underwater homeowners are left with no option to refinance and only the option of staying put, short selling their home, or letting their home go back to the bank in a foreclosure process. For purchase deals, the flip side of the coin is that the property valuation required by the mortgage company can often come in less than the negotiated sales price which could mean the seller declines to sell the home leaving the buyer looking for a new place.

Income

Proving income is an extremely important part of qualifying for a mortgage. The thumb rule is simple – you want to be able to provide a thorough paper trail for your income for at least the past 2 years if not 3 and your latest 30 days worth of pay stubs reflecting a year to date figure. If you have any significant gaps in your income over the past 2 years or so you will need to be able to explain what happened.

Income Sources

As a result of the sagging economy, many people have found additional ways to make to stay afloat. For many applying for a mortgage – having and counting on different streams of income is critical. The challenge about income streams is that they must be seasoned for at least 2 years. What this means is that being a strong credit candidate with money in the bank for down payment may not be enough if you are self-employed and have only been self-employed for less than 2 years. You may also have problems if you are just starting to get overtime, or you are just starting to get commission income with your new job.

What To Do

In summary, it is best to work as much as you can for as long as you can with no layoffs, while saving as much money as you can. I know this seems like a pipe dream, but in all cases it will help you with qualifying.

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.