11 Steps to Buying a Phoenix Home Series-Financing

Secure a Phoenix home loan before you start your home search

Phoenix home loan
If you have been following the future posts in this 11 Steps to Buying a Phoenix Home Series we touched briefly on how to establish or clean up your credit if needed. Now for the purposes of this series moving forward we will assume you have a least a 620 credit score, a steady documented income for the previous 12 months and your DTI is 41% or less as indicated in our previous post regarding debt-to-income ratios…the next step is to get pre-qualified with a Phoenix home loan.

Ask for referrals to qualified Phoenix home loan specialists

Word of mouth is the best way to find a great loan specialist for your Phoenix home loan and your Realtor is a great place to start. Your Realtor should have excellent referrals for you as they tend to use the same preferred lenders over and over again that make them look good and give their clients the best service available. Just like any business if you do a good job, word gets out about your services and others refer you business. I do not recommend just haphazardly going online and completing online questionnaires or applications. 9 times out of 10 your information is sold and you can get bombarded with loan professionals. Find a few that come highly recommended by asking your family, friends, neighbors and Realtor and start there.  A lender should be able to take a phone application and/or secure online application and have answers for you the same day. Unless of course you go to a brick and mortar bank where a pre-qualification can take up to five business days.

Understand the terms and fees associated with your Phoenix home loan

After you complete the application process via online, over the phone or in person you will be provided with a pre-qualification letter that will state the amount of financing you qualify for. In Arizona specifically your Phoenix home loan qualification letter may be issued on as an LSR or Loan Status Report. An LSR will be required to write any offer and typically required prior to view homes. If this is your first time buying a home and applying for a Phoenix home loan you will have several questions. Your lender should be able to tell you your rate (which can still change until you lock it), your estimated mortgage payment including taxes and insurance, your estimated closing costs to bring to the closing table (which you can negotiate the Sellers contribute to), and your required down payment for your particular Phoenix home loan program. First time home buyers will typically use an FHA loan with 3.5% of the purchase price required as a down payment.

Example: 100,000 purchase price x 3.5% = $3500 down payment

There are also Phoenix home loan programs such as a USDA loan which allows first time home buyers to purchase at $0 down provided the property is located in a qualifying area. Phoenix-Metro areas that qualify mainly are Queen Creek, San Tan Valley as well as parts of Apache Junction.

The next step once you receive your Phoenix home loan qualification letter is to select a Realtor to represent you if you have not already done so which we will discuss in the next post in this 11 Steps to Buying a Phoenix Home Series.

11 Steps to Buying a Phoenix Home Series-No Credit

Buying a Phoenix home requires good credit history

Buying a Phoenix home with good credit
No credit is not good credit. No credit will stop you from buying a Phoenix home. Some people assume they have good credit just because they have not used it or damaged it yet. This is not the case. The good news is there are easy ways to establish credit. I spoke with a client that asked, “Why do I need credit cards in order to buy a home?,” as she had no debt and did not want to get a credit card. The answer is you don’t. You can always save up and pay cash for a Phoenix home which many people sometimes do, however, if you are going to require a loan to finance your purchase you may have to consider the scenario from the lenders POV. If you were going to loan money to someone you will probably want to see that they have a history or managing debt responsibly prior to doing so in order to analyze the risk, i.e. the likelihood they will pay you back.

Establish credit as early as possible prior to when you plan on buying a Phoenix home

Establishing credit takes time. Having no credit does not illustrate you a.) know how to manage it or that b.) you will not abuse it.  You may have credit card offers come in the mail or when you go to your bank. It is ideal that you open three credit lines but no more with either your bank, department store, mail offer, etc. Most will come with a low or zero APR for the first year or so and of course you want the best rate and perks.  Instead of paying cash for things like groceries, gas, medicine, etc. just set your cash aside and use your card. Then when the bill comes pay it off with the cash you stashed. If you are going to carry a small balance vs. paying it off completely each month carry no more than 10% of the credit line for an optimal credit rating although paying it off each month in full is ideal. If you only carry a small balance and only buy things you would normally have to buy regardless, then you should be fine with managing your credit. In three to six months you should be on your way to having great credit to buy a Phoenix home.

Remember these 5 things when building your credit for buying a Phoenix home or any other purpose

  1. Make your payments on time every time or it will lower your credit score
  2. Always keep your credit card balance at 30% or less of your total credit line in the event you don’t pay it off in full each month
  3. Once you have a history request a credit line increase from at least one of your cards to be at 5K or more
  4. Don’t have more than 3 credit lines at any one time
  5. Don’t buy things you don’t need on credit, just buy the things you would buy anyway

Also it is important to note that it is a good idea to keep your cards for the duration. Don’t cancel one and hop to another just because they offer you a short term introductory rate. Try to negotiate the rates with the cards you have. Overall the length that you hold each credit line open will impact your score, i.e. the longer the better. This will in turn possibly get you better home loan rate when buying a Phoenix home and possibly a quicker approval process.

Many cards offer a cash back option. This means for every dollar you spend with the card (even when you pay the balance off in full each month) you will receive typically 1% or 2% cash back. So lets say you spend $2,000/month on groceries, food, gas, medicine, clothing, etc. you would have earned $40 cash back which is $40 more than you would have made if you bought the exact same items but just paid cash for them.

This post is not intended to be in any way a form or financial and/or credit counseling and it is advised you see a professional finance/credit specialist for further insight or questions regarding your credit prior to buying a Phoenix home. We have plenty of wonderful referrals!

I hope so far you are finding this 11 Steps to Buying a Phoenix Home Series helpful and I welcome any comments you may have below as we move through the series.

Common Costly Home Buying Mistakes You Must Avoid!

home buying mistakes in scottsdale, azDo You Make Any of These Common Home Buying Mistakes?

What Every Homebuyer Ought to Know About Avoiding These Costly Home Buying Mistakes!

Keep Reading to Discover How You Can Learn to Avoid Them…

John was excited about purchasing his brand new home, but he was preparing to make one of the most common home buying mistakes made by would be home buyers.  John thought driving up in his brand new car would be a great idea.  The ‘new car’ smell was mesmerizing and the vision of the wind flowing through his wife’s hair as they cruised through their new neighborhood with the top down became irresistible.  He drove off the lot with a big joyful smile and a gleam in his smiling eyes.

Unfortunately, his smile soon turned into a frown of sadness when his lender informed him his new car purchase showed up on his credit report right before they were getting ready to fund the loan and close.  John’s car purchase had just disqualified him from his new home loan.  Indeed, costly home buying mistakes like this happen every day.

The new car monthly payments were added into John’s monthly expenses and raised his debt to income ratio to a higher level, immediately disqualifying him  A very sad state of affairs, but common home buying mistakes like this are all too common I hate to say.

These type of home buying mistakes are very costly, but are not isolated to just new car purchases.  Home buying mistakes also occur when would be buyers want to have things in order and finance appliances and furniture in advance of closing on their new home loan.  Even racking up charges on your charge cards can increase your debt to income ratios enough to disqualify you for your new home loan.

Recommended: avoid these common home buying mistakes by eliminating all major purchases as much as possible before purchasing a home.  If you must make them, check with your lender first and have them re-run the numbers to make sure you don’t end up spending the night in your convertible instead of your new home, like our poor friend John.

More Costly Home Buying Mistakes

Costly home buying mistakes made by many would be tenant buyers lately is to hand over their down payment money directly to the for sale by owner.  It looks like a great deal, buying direct from the owner, the price seemed right and the owner was willing to work with you on accepting a fair rent until you were able to qualify for a loan to finish the purchase, but one of the most common (and costly) home buying mistakes was in the making.

One day, typically a real estate agent, knocks on your door asking if you are the owner.  You explain you’re the tenant and are purchasing the home from the owner and the agent goes on to inform you the owner has been foreclosed on, asks to view your lease and offers you a relocation assistance program to help you with your move from the new owners at the bank.

I’ve personally seen these type of home buying mistakes made time and again.  One would be tenant buyer gave someone posing as the owner, not only their down payment money, but their first and last months rent. Ouch!

Recommended:  Use a real estate agent to help you avoid these common home buying mistakes that are running rampant right now with all the foreclosures happening.  At worst, get your down payment money into a 3rd party escrow account, so access to the money can’t be gained by either party until either the house closes or the deal falls through.  You may want to also screen the owner and get some credentials from them to prove who they really are and check the county recorders office to see if a Notice of Foreclosure Sale has been filed.  Search the tax assessor and county recorder websites to find out who really owns the home and don’t ever hand over cash money to the owner, one of the very large and costly home buying mistakes.

Costly Home Buying Mistakes – Utilities Not Turned On…

Believe it or not, some home buyers actually forget to have their utilities turned on in their new home before they move in.  Of course, Murphy’s law is in full effect, as this usually is discovered on a late Friday going into a weekend when no one is going to help you until Monday.  That makes for a very uncomfortable inauguration into your new home, especially at 110 degrees in Phoenix, Arizona or in the dead of winter with no fireplace.

Recommended: make a note to yourself to arrange two things: (1) turning off utilities at your old residence and (2) getting them turned on at your new home.

Avoid Common Home Buying Mistakes…

Having a good real estate agent to look out for your interests as you go through the process of buying your new home is an extremely important asset you don’t want to overlook.  Their services are paid for by the seller and they can literally save you thousands of dollars in grief avoidance with their expertise in helping you avoid not only these, but many other common (and costly) home buying mistakes made by would be home buyers.

It’s their job to keep up with all the details of the transaction from day-to-day, and keep everything moving smoothly and on track towards the exciting day of closing.  They help shield you from a great deal of the frustration associated with buying a new home and help you stay up with the requirements of the lender as the home progresses to closing too.  They arrange home inspections, remind you to turn on utilities and keep things on track.

Many home buyers fail to do this and then find themselves way behind in the process at the very last minute. This can sometimes lead to delay or even cancellation of the transaction.  Recommended: take care of your side of the fence by staying on the same page as the lender all the way through the process.

The better educated you are about potential and costly home buying mistakes you could make when buying a home, the better chance you have to keep the entire home buying process cruising along smoothly toward a successful close.

By the way, after you’ve closed and you want the wind blowing through your hair in that new ragtop, go for it knowing you have avoided those treacherous common costly home buying mistakes.

15K Down Payment Assistance for Phoenix Area First-Time Home Buyers

15K Down Payment Assistance for Phoenix Area First-Time Home Buyers15K down payment assistance is available for Phoenix area first-time home buyers via a second Neighborhood Stabilization Program (NSP2) awarded by HUD to Chicanos Por La Causa, a statewide community development corporation (CDC) whose goal has been to promote the well being of Arizona’s socially and economically deprived communities.

Other perks of the program include buyers can receive a free home warranty and security system as well as the homes in many cases are already rehabbed and move-in ready as well as energy efficient.

The program is available to every ethnicity and in qualifying areas. There are some eligibility requirements for borrowers that must be met such as an income verification and borrowers must still come up with the required FHA down payment amount of 3.5% of the purchase price.


Fill out the form below to receive information on how to receive 15K down payment assistance on the purchase of your first Phoenix area home.

Residential Real Estate Investing For Newbies

These days, much of the attention on real estate is focused on properties specially for residence. This is no surprise, since the economic and credit crisis precipitated a great countless foreclosures in the United States. As an outcome, various houses were set on trade by banking institutions, or by folks who would preferably sell their residences than have them foreclosed. On the other part of the trade, there had been lots of persons out to take advantage of the new pricing state, or merely on the lookout for new affordable housing.

It is no doubt, then, that information about property investment regularly gets lost within the shuffle. On the other hand, real estate sold for investment is still fairly a good choice for a property agent to look into. Here are a few ideas that may be helpful to you, principally if you are an inexperienced agent, or one who is accustomed to functioning mainly with real estate as living space.

It must be confirmed that the marketing for getting individuals to invest in a particular property or portion of land is dissimilar from that commonly used to generate interest in actually living on a particular property. In the latter, you are trying to assure consumers that the property is not just affordable but apt to their wants, lifestyles, and even personalities. In the previous, nonetheless, the considerations are more straightforwardly financial, since the person will not actually be living on the property. You should most likely then focus on more “objective” characteristics and info, instead of subjective things like ambience.

Then once more, subjective elements do sometimes come towards the fore when attempting to acquire investors for a property. For example, you might be trying to facilitate a sale of land which is to be used to start environmentally-friendly establishments or a school for needy youth. Cause-oriented promotion might lend a hand. You may want to bring into play NGO’s as sources of networking. For example, individuals who frequently take part in NGO’s associated to the “cause” of the property’s enhancement might be attracted in investing.

If you feel exceptionally adventurous, and can acquire contacts to aid you with the legal aspects, you might even desire to start offshore real estate investments. These might be somewhat tricky, given the several overlapping as well as conflicting policy you’ll have to abide by. Below are a few things you’ll have to look out for.

Firstly, certain places often specify that commercial property in the country be required to have a particular percentage owned locally. Be certain you are not involved in unsuspectingly violating this kind of provisions. In addition, do not get entwined with projects that violate labor or environmental regulations in the country where the real estate is situated. Frequently, it is the rules of the country of the property (not the country of the investor) that are followed.

Secondly, it can help to have trusted local contacts who can check the property for you, if you are unable to visit it yourself. This way, you will see that you are not being lied to.

Another great article by Waterfront properties Ottawa This article, Residential Real Estate Investing For Newbies is released under a creative commons attribution licence.