Buying your first home can be SO exciting, but it can get overwhelming if you’re unsure what all the steps are. So much excitement comes with knowing that you qualify for a home loan and soon you will be buying a home in Arizona. Before you start your journey to buying a house in Arizona, here are some tips you may want to keep in mind.
- Grow your cash reserves
Home buying can be an expensive venture, and you will need to have some cash set aside. For some homebuyers, getting a mortgage is the first option in order to finance their dream home. However, first-time homebuyers may not be aware of the importance of having some cash set aside before applying for a home loan or considering different Arizona home buying programs that finance homebuyers. Many lenders require cash reserves before accepting loan applications. Here are some important facts you need to know about having cash reserves when applying for home mortgages.
- Cash reserves are the saving balances that will be available after the close of the home purchase.
- You may use part of the cash reserves to clear down payment for the home you are planning to purchase.
- Lenders consider cash reserves to be the emergency fund and you will use it as a backup to pay for housing expenses in case anything happens to your income.
- Mortgage lenders will calculate cash reserves in months. This refers to the number of months your reserves can be used to pay for housing expenses.
Note that having larger cash reserves before applying for a mortgage can help to negotiate for a lower rate. Therefore it may be beneficial to consider accumulating enough cash reserves to attract cheaper mortgage rates from lenders.
2. Determine the value of the house you are willing to purchase
The second step that you need to consider is determining the value of the house that you can afford. It is not all about buying a house in Arizona, but ensuring you are buying an affordable property. This helps you to avoid over borrowing. Some home buyers find themselves trapped in debts because they purchased a property that is more expensive than what they can afford to pay. If you qualify for a mortgage when buying a house in Arizona, it does not mean you have to take the maximum amount to purchase the property. You need to consider a suitable Arizona home buying program that will help you finance the home while also making it affordable for you to repay.
3. Use your cash reserve as a down payment
If you are not able to raise the full amount to purchase a home in Arizona, then try raising the down payment. This can be 20% of the total price or even more. This means that you will not have to pay for private mortgage insurance. The PMI is meant to protect the mortgage company when you are not able to make the repayments ending up to foreclosure.
Not sure where to start? Have more questions? Find a Loan Officer and ask them anything!
4. Compare home buying mortgage rates
Congratulations for qualifying for the loan! What’s next? Compare what other lenders are offering. Research different Arizona home buying programs. Be keen to check the rates at which they are willing to lend you at. Some lenders will charge you more compared to others. Remember to read the full mortgage terms and conditions and ask questions. Just because a lender is charging you a lower interest rate doesn’t mean the mortgage will be affordable for you. The terms and the total cost of the mortgage might make the mortgage more expensive. Don’t be afraid to ask questions throughout the process.
5. Does the Home you are buying match your requirements?
There are several factors to consider when determining a suitable home. Are you purchasing a home with an intention to resell for a profit? What is the likelihood of finding a buyer in case you are planning to resell? Check for the features making the home suitable and other attractions in order to determine if the price is suitable and right for you.
6. Consider Home inspection and valuations to ensure a fair buying price
When buying a home in Arizona, you need to involve third parties. First, you need home inspectors who will check to make sure the home is constructed as per the local regulations and standards. If the house does not meet the minimal requirements, you might end up incurring losses when the authorities finally catch up with you. The property valuer will calculate the face value of the property to advise you if you are getting fair pricing.
Consider undergoing the above steps before buying a house in Arizona. The steps will help you identify a suitable lender, the best Arizona home buying programs while making sure you purchase the most suitable and affordable property.