Well done for taking a major step in life as a first time Arizona home buyer.
For you who might be daunted by the thought of buying your first US home, it is actually an exciting course of action.
You are already in the first step of home buying by coming to this page – to get surefire and straightforward guidelines of the basics of an important decision.
Where Do You Buy?
- As the saying goes in real estate, what really matters is “location, location, location”. Consider factors such as school quality, crime rates, resale potential, transportation and neighboring amenities. Identify your criteria of preference and the place where you would like to settle. If you’re a a first time Arizona home buyer and a family with small children, choosing a community with other kids around gives you somehow an assurance that the area is a good place to live in.
Getting the services of a real estate agent or a facilitator is your option once you have identified where to have your home.
Resolve Issues Before Signing Contract
There may exist a lot of risks when certain issues in residential properties are not taken care of before formalizing a contract. Make sure all concerns on construction defects or repair problems are addressed correctly in the early process of negotiation, even before making an offer to buy. Ask a home inspector or someone you know is experienced to look into these matters. Always be polite and work harmoniously with the people helping you.
Basic Questions To Ask
As a first time Arizona home buyer, what disclosures are required by Arizona sellers to give to buyers?
What kind of home inspection or survey is standard in the area? What does it cost and who pays for it, the buyer or the seller?
Who does the title search for the property for verification purposes, and how much is the service?
Who will act as the settlement or closing agent to put up the final paperwork for the buyer to sign?
What’s the average or estimated closing costs?
How long does it take to close on a home?
The foregoing groundwork will put your self-confidence in a better position and find the rest of being a first time Arizona home buyer stress-free.
Check Your Finances
Before you apply for a mortgage, check your financial history. Your credit standing is a good indicator of how you have been managing your finances. Creditors or mortgage lenders base your approval and interest rates on these. Get more help and tips about mortgage loans here. Relatively, it is wise to take a look at your credit report periodically because errors not of your own doing can damage you without you knowing it.
Get a mortgage pre-approval to determine the house that you can afford. Not being prepared before offering a seller gives you lesser chances to be considered for the buying process, especially if there are other interested pre-approved buyers.
What Are The Costs Involved?
The selling price is not all. Downpayment, pre-paid insurance and taxes, and mortgage fees will add up to about $4,000 in extra costs.
For example, an appraisal on your house is about $300. Mortgage preparation fees are $1,000 on the average. Home inspection? Say, $300, too. And a lot more. All these will be individually listed in the HUD-1 Settlement Statement form (see below).
But don’t let this scare you. You will always recoup these expenses over time. Buying a home is a wise investment.
Shop For A Home
After laying out your realistic criteria, start locating your dream home. You can find the best buys here plus insider tips on why Arizona could be your best investment.
Take a closer look at the property’s resale potential before you make an offer. Is the resale factor good, such that it would still grow in value and sell quickly? TIP: Choose a home that suits your needs, but one that others might want, too.
Your contract will include written clauses on contingencies that will allow you to evaluate the property further before closing or back out without penalties. Common first time Arizona home buyer contingencies deal with the presence of toxic substances such as radon or lead in paint, termites, water and septic system test, or boundary survey.
How To Make An Offer
Ahhh… Everything looks perfect, but… Hold it! There’s also a checklist to figure out how much to offer.
What fixtures are included? Are the built-in range, refrigerator, kitchen cabinets, heating and cooling system included in the package? Don’t take chances. Decide with the seller which of these and other fixtures (like garage storage enclosures and door openers, chandelier, or portable air conditioners) must stay or go to avoid walking into your new home with something missing!
Check on the prices of recently sold similar homes to give you a fair idea of how the real estate market is going in your area. You can also go to the local courthouse to find records on the property’s records, but don’t base the current sale price on the previous selling price because the market might have gone up since then.
You might consider hiring an appraiser to get a close estimate of how much the house is worth. But this will take a little time, and different appraisers sometimes differ in valuation.
Only make a low offer if that’s how far you can go, or if the property is over-priced. Otherwise, if the seller really gave you a realistic offer, he or she might take your offer as an insult. On the other hand, make an offer that’s a little above or exactly the selling price if you really want the property and competition is tough.
Find out why the seller is selling his house. Is there a divorce or death in the family? Whatever it is, he or she might be flexible to lower his asking price specially if you are a first time Arizona home buyer.
Determine if the house has been listed for quite sometime. If only recently, the seller may not be ready to negotiate for a lower price.
Is there a need for house repairs, or pending upgrades? Will the roof still last for long? Don’t miss these.
When Closing Date Nears
No matter how perfect you think the transaction has gone before closing date, it pays to check its progress regularly. A teeny bit of problem can be corrected immediately without hampering the smooth process. Some don’ts are the following:
Don’t buy a new car before closing on the deal. An excited first time Arizona home buyer sees a new car would look perfect on a new home, right? But never purchase it before mortgage closing because your debt-to-income ratio will go up, thus making you a higher risk to the creditor and your monthly mortgage payments could increase considerably.
Don’t quit your job yet. Not until the house is legally yours. A stable job history is essential for mortgage approval.
Don’t give an earnest money deposit before closing. Deposit funds should go to an attorney or a neutral party. You don’t wanna be caught in the middle of a canceled transaction with your deposit spent by the seller already, do you?
Don’t fall in love with the house. You might overbid despite probable repairs needed. On the other hand, be realistic that houses are not perfect. Minor repairing may always be necessary and should not pose a problem.
Don’t forget the utilities. Overwhelmed as you are, some people miss calling the utilities and switch the service. Find out the lead time needed as your closing date nears.
Don’t go through the closing process alone. Work with someone who can track the various details that involve the lender and the seller.
Don’t close on a home without a final walkthrough to make sure the house is in the condition stipulated in the contract.
Don’t disregard lender requirements. Some documents may need time to produce and moving to your new home will depend on complying with all these paperwork.
Your Title Insurance
What’s it for anyway? Imagine a month after settling in your new home, a stranger knocks on your door to claim ownership of the house. And all you can say is, “Whaaat? How on earth did that happen?”
Title insurance will help protect you against losses that could occur if you discover that after closing, someone else is on the title. This is very important as a first time Arizona home buyer. It examines all public records of a title to a piece of real estate. Past deeds, wills, mortgage records, judgments, and all liens are checked to ensure a clean transfer of title to its new owner.
Your HUD-1 Closing (Or Settlement) Statement
HUD-1 (acronym for Housing and Urban Development) is a standard real estate settlement form in the United States used by your closing agent showing all itemized buyer and seller costs. It displays both parties’ incoming and outgoing cash flows. The more people who review it, the more errors can be spotted.
Closing The Deal
Typically, it takes about 15-90 days to close on a home. Set it on a date convenient or that works for you. If you are currently renting, close near the end of the lease to avoid paying excessive rent. You will have a day or two to review the final contract with your attorney and the mortgage loan with your lender.