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-Budget and DTI

The Phoenix home buying planning process means time to budget

Phoenix home buying seriesIt is time to finally track your spending and put pen to paper an itemized list of where you spend money each month and how much. The goal here is to see how much Phoenix home you can afford within your budget.  The good thing is right now in Phoenix-Metro area you can own for less per month that what you can rent in many areas so your living expenses might actually go down once you buy!

Accurate figures are important to the Phoenix home buying planning process

Start with making a list of all your expenses such as utilities and living expenses such as electricity and groceries, then all monthly expenses such as credit card bills, car insurance and yes add your entertainment, clothes, etc. as well. If you spend $40/week on movies and you want to continue to spend $40/week on movies than include it, otherwise remove or lower it to something you feel is reasonable and then follow that. You may be surprised to find out how much money you spend on certain things that with a few minor changes here and there you can drastically reduce your overall monthly expenditures. After you total everything and subtract it from your income you will have a figure. From that figure take a certain percentage off the top to add to your savings accounts and/or retirement plan, etc and the final figure leftover (assuming you already accounted for miscellaneous disposable income in your list) is what you can afford as a mortgage payment with/without any lifestyle changes while growing your savings.

Lenders consider Debt-to-income (DTI) ratios during the Phoenix home buying pre-qualification process

The above budget is mainly for your purposes so you can determine during the Phoenix home buying process your comfort level with the money in and money out every month and also help identify spending habits that can be modified to help strengthen your overall financials. Lenders will take your debt such as current mortgage/rent, credit cards, car payments and compare it to your income (aka DTI or debt-to-income ratio). The qualifying ratio will vary by loan program and FICO score but for our example we will use FHA which is 41%.

Lets consider a quick scenario in determining DTI for a Phoenix home buying loan applicant;

Your Monthly payment on mortgage/rent = 1200
Minimum Monthly Credit Card Payments = 300
Monthly Car Loan Payments = 450
Other Loan payment = 300

Thus, your total monthly debt payment = $2250

Now, let’s consider your Gross Annual Salary = $75000
So, gross monthly salary = $6250
Other monthly income = $1000
Thus, your gross monthly income = $7250

So, mortgage debt to income ratio = (monthly debt payment)/(gross monthly income)
= ($2250/$7250)  = .310 or 31% which is well within the standard DTI ratio.

Hopefully now you have a good idea of how much you can comfortable afford every month, what changes to you budget need to be made if any and if your debt-to-income (DTI) ratio is in-line with qualifying. If not you may have to pay off some debt to get your ratio where it needs to be as part of the Phoenix home buying process.

11 Steps to Buying a Phoenix Home Series-Intro

Buying a Phoenix home may take planning…

11 Steps to Buying a Phoenix Home Series
When buying a Phoenix home nowadays it takes more than the ability to fog a mirror <wink> as in the old days of the No Income Verification and No-Doc loans.  It’s not as simple (especially now) to qualify when buying a Phoenix home.  This is a good thing, as we sure don’t want a repeat of the mess we’re in now. Or maybe, you disagree and are miffed about it being more stringent to get a loan when buying a Phoenix home.  Either way, leave a comment, I’m curious what everyone thinks about this.

It is important to understand when you think of credit that you think of credit ‘history’.  Lenders want to know you have established and used your credit wisely.  The history of your credit for the past twelve months or longer in some scenarios will come into play when trying to buying a Phoenix home and qualifying for a Phoenix home loan.

No credit=no qualify when buying a Phoenix home

No credit means no credit ‘history’.  As mentioned before this is something that will affect how or if you qualify for a home loan.  Keep in mind there are ways to boost your credit score and/or establish credit in a responsible way that will be addressed during this 11 Steps to Buying a Phoenix Home Series.

Start saving now if you are planning on buying a Phoenix home within the next 12 months.

If you already know you qualify… Congratulations!  You can stay tuned for future posts in this 11 Steps to Buying a Phoenix Home Series that more closely relate to where you are personally at in the home buying process.

If you are not sure if you qualify or already know you do not qualify these next few posts will be just for you!  Hopefully, you will qualify within the next 12 months or less to meet your home buying goal and we look forward to helping educate you on the process.

*Please keep in mind this series in not intended to give you financial or credit advice and you should contact a qualified financial and/or credit specialist to further investigate ways to help you establish or build your credit.  We have great referrals for you that can guide you on how NOT to make the common mistakes many would be buyers make every single day.

Looking forward to your comments on this 11 Steps to buying a Phoenix home Series!! I’m curious, do you think we should still have less stringent loans (i.e. NIV,  No-Doc, etc.) available when buying a Phoenix home?

Phoenix-Metro Rated in Top 5 Sunny Cities To Watch in 2011

Phoenix-Metro Real Estate Recently Rated #2 in 5 Sunniest Cities To Watch in 2011 in Investopedia–a Forbes digital publication.

Phoenix-Metro real estate in sunny Arizona
One thing is for sure and that is Phoenix-Metro real estate has some of the best real estate deals in the US from both an investors standpoint and opportunities available to owner-occupied and/or first-time home buyers.

Phoenix-Metro Real Estate Offers a High Standard of Living

On average 293 people move to Arizona everyday for business opportunities, warm climate and low-cost housing. Golf courses and a plethora of dinning, shopping and entertainment venues native to upscale locations such as Scottsdale also keep Phoenix-Metro Arizona as a great place to visit or own an affordable vacation getaway.

Phoenix-Metro Real Estate is Popular Among Snowbirds

Phoenix-Metro is a popular destination for retirees and other Midwest, Northern and East Coast relocates as well as Canadians looking to get out of the harsh winter climates either seasonally (snowbirds as we like to call them) or as year-round residents.

In a recent Investopedia article, Ryan Fuhrman, sited Phoenix as one of 5 sunny cities to watch in 2011, stating;

Given that they were among the hardest hit, they could see quicker recoveries that also build steam in the next couple of years. They share some positive characteristics, including sunny locales that retirees find popular, and all were benefiting from a general population migration to warmer climates from colder ones in the northern parts of the country.

Whether your a snowbird, year-round resident, retiree, Midwest transplant, investor or an Arizona native the Phoenix-Metro real estate housing market has a lot of low-cost housing opportunities to take advantage of now and to come in 2011.

Click here for Phoenix-Metro real estate foreclosures by city

The Fine Art of Negotiating Your Phoenix Foreclosure Real Estate Transaction

Negotiating your Phoenix Foreclosure Real Estate Transaction is something mastered by experienced Realtors.

Phoenix foreclosure real estate transactionLike with anything, experience builds confidence and confidence builds excellence. Negotiating a Phoenix foreclosure real estate transaction is no different.  Most Realtors in today’s Phoenix real estate market have negotiated some foreclosure transactions if they have done business the last three years or so. That is not to say they are excellent at it.

Proper representation is important in a Phoenix foreclosure real estate transaction.

Proper representation is important in a a regular or short sale real estate transaction as well. This is just to point out that ‘proper’ representation in a Phoenix foreclosure real estate transaction is more times than not with a Realtor that has extensive experience in negotiating Phoenix foreclosure transactions.  The main difference in negotiating with the Seller of a bank owned foreclosure property is that there is a chain of command that must approve and/or sign documents and each bank follows their own line of protocol and time frames. This translates overall to deadlines being strict, terms being firm and stakes being high.

Keep your emotions out of your Phoenix foreclosure real estate transaction.

Don’t take it personal that the bank wants to charge per diem fees if you don’t close on time or that they don’t want to replace the out-dated fixtures.  A Phoenix foreclosure real estate transaction will state the homes are sold ‘as-is’ and there are other certain characteristics of a Phoenix foreclosure real estate transaction that are pretty much universal, such as;

  • Earnest money needs to be in the form of a cashiers check
  • Sellers will not provide Seller Property Disclosure Statements (SPDS)
  • Sellers will not provide insurance claim history (aka CLUE)
  • Home is being sold in as-is condition
  • Per diem charges will apply if Buyer does not close on time through no fault of Sellers
  • Buyer is required to re-key the home after closing
  • There is no chance or pre-possession

Keep your eye on the prize and employ an experienced foreclosure Realtor to represent you and the process will go smoothly and stress free. Click here to contact us directly or complete the short form below if you are looking for Buyer representation in the Phoenix-Metro area. Our foreclosure team services Phoenix Valley Wide and has several experienced and knowledgeable Realtors dedicated to helping you with your Phoenix foreclosure real estate transaction.