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First-Time Home Buyer in Arizona FAQ

Common Questions asked by First-Time Home Buyers in Arizona


To be considered a first-time homebuyer, you should not have purchased a new home in three years. Even if you purchased a home three years ago and have owned it since, you will still be considered a first-time home buyer in Arizona despite the fact that you are actually not a first-time homeowner. Here is a guide for first-time homebuyers in Arizona:


Q: Why should I purchase a home instead of rent?

A: It is important to note that homes are investments. Renters, on the other hand, will have to make monthly payments which take their money away forever. Nevertheless, homeowners are able to subtract their mortgage loan interest payment from the federal income taxes, and typically the state taxes. This results in borrowers saving a lot each year due to the low interest paid, making up most a decent part of the monthly payment for most of the years of the loan. 


As a homeowner, you’re also able to subtract property taxes. In addition, the value of your home may possibly increase over the years. And, eventually, you’ll be able to own a house that’s all yours. Buying or renting is a personal choice and could depend on individual to individual. Evaluate your financial situation and the projected future before making that crucial decision. Buying has its share of drawbacks as well. 


Q: What programs are available to first time home buyers?

A: There are several home mortgage programs available for first-time buyers in Arizona. You could get a Refinance, FHA, VA, USDA, or conventional mortgage loan. All these plans depend on your financial situation, credit score, down payment amount, loan-to-value ratio, debt-to-income ratio, and other factors. Always research on the best deal for your situation before locking yourself in a stressful mortgage for years.


Q: What is “HUD homes” and are they a good deal?

A: HUD homes can be a good deal to first-time homebuyers in Arizona. When borrowers with HUD-insured mortgages are not able to meet their payments, the lender typically forecloses on the house, then HUD pays the lender what’s owed, and HUD takes ownership of the home. Afterward, the home is sold at market value as fast as possible. HUD helps reduce the lender’s risk which will then translate to lower interest rates and better loan terms.


Q: Can I become a homeowner even if I’ve had bad credit, and don’t have much for a down payment?

A: There are some options for people in this kind of situation. It is advisable that you apply for the federal mortgage programs if you’re in this situation. The first thing is to contact a HUD-funded housing counseling agency to assist you in sorting through your options. In addition, be sure to contact your local government to ascertain if there are any local home buying programs that could fit your particular needs.


Q: Are there special homeownership programs or grants for single parents?

A: Yes, single parents are not left out. First, ensure you are acquainted with the home buying process and that you know how to select the best real estate broker. Single parents normally do not have the advantage of being on two incomes to qualify for a mortgage. So, you ought to consider getting pre-qualified. Getting pre-qualified allows you to quickly qualify for a house you prefer and one that is in your price range. You should deliberate on contacting one of the HUD-funded housing counseling agencies in your area to find other options that could become ideal to your situation. 


Q: Should I use a real estate broker? How do I find one?

A:  Using real estate brokers is a brilliant idea if you have the financial ability. All the details involved in home buying, particularly the financial ones, can be quite demanding. Competent real estate brokers are professionals who can guide you through the whole process and make the experience a lot easier and successful. A real estate broker will be informed with all of the vital requirements regarding the neighborhood you will be selecting. They will help you find out the price range that is affordable and will search the classified ads and several of the listing services for homes you will want to see. With their direct access to homes almost as soon as they are put onto the market, the broker can and will save you a lot of wasted time spent driving around. 


When you’re ready to make an offer on the house, the broker will point out ways to build your deal to save you money but still have a reasonable offer price. They will be there for almost every minute of buying your new home, and at no cost whatsoever! Yes! The payment normally comes from the home seller and not from the buyer. In addition, if your aim is to buy a HUD home, it is necessary to go through a real estate broker to submit your offer. To find a broker that sells HUD homes, check online, or on your yellow pages of the classified section of your local newspaper.


Q: Who pays the Realtor fees when buying a home?

A:  It is the seller who will pay realtor fees out of proceeds from their home sale. This is if there is enough equity, of course. If the deal ends up failing before it closes, the realtors will possibly go unpaid.


Q: What types of properties can I buy as a first-time homebuyer?

A: There are numerous options that you can buy as a first-time home buyer in Arizona. For instance, you’re able to buy a single-family residence, a small family (2-4) primary residence, condominiums, townhomes, row homes, and co-ops, as long as they’re common in the area.


Q: How much do I need to buy a home?

A: This is subject to numerous factors such as the cost of the house and the type of mortgage you will be getting. Generally, you must earn enough money to cover three different fees: 

  • Earnest money, the deposit made on the home when you submit your offer;
  • The down payment, a percentage of the cost of the home that must be paid when settlement begins; 
  • Closing costs, the costs associated with the processing of the paperwork to buy a house. 


When an offer on the house is made, the real estate broker will place the earnest money into an escrow account. If the offer is approved, the money will be sent to be paid as a down payment or closing costs. If it’s not approved, it will simply be returned to you. The amount of your earnest money varies. If you are looking for a HUD home, for instance, your deposit will generally have a range of $500 – $2000. It is important to note that the more money you put into your down payment, the less your mortgage payments will be. 


Some loan types will need 10-20% of the acquisition price. This is the reason why so many first-time homebuyers turn to HUD’s DHA for assistance. FHA loans require very little down payment. Closing costs, which you pay at settlement, range only between 3-4% of the price of the home. The costs will cover several fees that your lender charges along with other processing costs. When applying for a loan, the lender will give you an approximation of the closing costs so you won’t be astounded. If you purchase a HUD home, they may even pay your closing costs.


Q: Can any portion of the down payment to be a gift from a relative?

A: Yes, FHA allows gift funds to apply toward any part of the down payment, closing costs, and prepaid items. Conventional financing permits for gift funds, but 5% of the funds must be your own unless the gift is 20% of the acquisition price or higher.


Q: How do I qualify for a loan?

A:  Mortgage loans are established by your credit, income, and asset health. All these three must be present, no matter what and it is imperative to talk to a broker or a lender about it. It’s an ideal idea to be pre-qualified for a loan, so you’ll be able to easily apply for a loan. You will then be aware of how much you can afford and it will speed up the process once you find the perfect home.


Q: Should I get a home inspection?

A: While a home inspection is not essential for a lender, it is less stressful to know that the home you’re about to buy will not be a financial drain. Home inspectors inspect for the condition of the property which includes the mechanical, electrical, plumbing, etc. If the inspection report is not good, you can try to get the seller to fix those problems or cancel the offer.


Q: Should I talk to a lender and get pre-qualified before looking at a home?

A: Yes, it’s always important to get pre-qualified before looking at homes, especially if you’re not pre-approved. You’ll be able to know exactly how much you’ll be able to afford, and as a first-time home buyer, there will be many mortgage plans available to help you with your purchase.


Q: Apart from the mortgage payment, what other costs do I need to consider?

A: One of the biggest “other costs,” that most first-time homebuyers overlook is the monthly utilities. If they previously used to be covered in your rent, this might be news to you. The real estate broker will be able to have all the information on how much the utilities usually cost. Besides, you might have homeowner association or condo association fees. For sure, you’ll have property taxes, and you could potentially have city or county taxes. Taxes are usually combined with your mortgage payment. Once again, your trusted broker will be able to predict those costs for you.


Q: So, what will my mortgage cover?

A: Almost all mortgage loans have four parts: principal, the repayment of the amount actually borrowed; interest, payment to the lender for the money you borrowed; homeowner’s insurance, a monthly amount insuring the property from fire, smoke, theft, or any other potential dangers absolutely necessary by most lenders; and property taxes, the annual city and/or county taxes assigned to your property, divided by the number of payments you make in a year. Most mortgages are 30 years long. 


Nevertheless, there are some that are 15-years. In the term of the loan, you’ll end up paying much more in interest than in principle, sometimes twice or thrice more. Depending on how the loans are built, in the first years, you’ll be paying mostly interest in monthly payments. However, in the final years, your monthly payments will mostly comprise of principal payments.


Q: What do I need to carry when I decide to apply for a mortgage?

A: This is a very important question for first-time homebuyers when planning to visit your lender. With these things, a lot of time will be saved:

  • Proof of any other assets such as bonds or stocks
  • Name and address of a reference. It’s best to include both your boss and a co-worker you are close in case one is unavailable.
  • Social security cards for both spouses, especially if both are taking part
  • All credit card accounts and the monthly amounts owed on each one
  • Copies of your last two years’ salary tax statements
  • The most recent available paycheck stub explaining your income
  • Account numbers and balances due on huge loans, like car loans



Q: What if my offer is rejected?

A: It’s good to have an open mind and be ready for anything. They usually are rejected but that’s nothing to frown at. You may have to offer more money; however, the seller may cover a percentage of the closing costs or make repairs that conventionally wouldn’t have happened. Most of the time, negotiations on a price go back and forth several times before a deal is made, So, be sure to keep in mind exactly how much you can afford and use this as a learning experience if things do not go your way.


Q: What will happen at closing?

A: Essentially, what you’ll do is have a meeting with your broker, the seller’s broker, or maybe the seller, and a closing agent. The closing agent will provide a lot of paperwork for both you and the seller to sign; while they give a basic clarification of the function of each paper. It is advisable that you give a quick minute to make sure you actually understand what it is saying.

 If you do not understand a thing or if there’s an issue, be sure to check with your agent in order to ascertain you know for sure what you’re signing, specifically because the amount of money you’re being handed is colossal, and you’re committing to it for a long time. Besides, before you go to closing, your lender should give you a booklet essentially explaining the closing costs, a “good faith estimate” of how much money you’ll have to give at closing, and a full list of papers and documents you will need at closing.


 If your lender does not supply you with these, reach them before you go to closing. These documents are extremely vital. Don’t hesitate to ask our Arizona mortgage experts any questions that you might have! Contact us now!