Renting an apartment, condo, or other type of living space can be a great way to afford housing. However, if you want your living space to ever serve as an investment in the future, then you will need to think about buying a home rather than renting. Then, your monthly payments will build equity over time that you can take advantage of rather than simply going to the landlord.
Buying a home in Arizona is no easy task. It requires a lot of money upfront, even if you are just going to pay a small down payment. You also incur the extra costs of owning a property, such as maintenance, insurance, homeowner’s association fees in some cases, and utilities.
If you are looking to buy your first home in this southwestern state, then you want to be as informed as possible so nothing takes you by surprise. Here are a few things that first-time homebuyers need to know.
Qualifying for Loans
Unless you have a ton of savings built up, you are likely going to require financing to afford your first home. Most buyers will take out a loan that they agree to pay back over a fixed timeline with additional interest owed to the lender. You will qualify for different loans depending on your life circumstances. For example, active military service members, veterans, and surviving spouses can get better loan terms through a VA mortgage. Low-income families can take advantage of federally-backed FHA loans that make homes more affordable. If you are looking at more expensive properties, then a jumbo loan may be needed to cover the cost. Find out what loans you qualify for to get the best possible terms for your payment structure.
Payment Assistance Programs
Having a home tends to provide many societal benefits, and the more people who are homeowners, the better it is for the community. For this reason, there are many payment assistance programs across the state of Arizona that can make houses more affordable, especially for first-time homebuyers. The HOME Plus program is one such initiative that provides a grant to be used for a down payment or closing costs. Home in Five is a program available to Maricopa County buyers, (encompasses much of the Phoenix area), in the form of a silent second loan with no interest and no payment as it is forgiven each month over three years. There are other programs across the state, so do your research to make your house more affordable.
Many buyers are unaware of the real cost of closing on a home. There are many fees that are required for a real estate transaction, such as attorney fees, realtor fees, title search fees, loan creation fees, and processing costs. How much are closing costs in AZ? Typically, they fall between 2-5% of the total cost of the home. In many cases, this extra cost can be wrapped up into the loan agreement with your lender. Closing costs are also one of the components that can be covered by a payment assistance program for first-time homebuyers. Either way, you need to be aware of these costs so you can stay within your budget.
Maintenance and Repairs
If you have been renting for a long time, then you probably know that the landlord or property management company handled most repairs or upgrades that were needed in your living space. Unfortunately, the burden shifts completely to you as a homeowner. Often, new buyers overlook the real costs of maintaining a home once the purchase is complete. Insurance companies have found that homeowners will spend between 1-4% of the total cost of the home each year on maintenance or repairs.
What You Are in For in Arizona
If you are moving to Arizona from another state, then you definitely need to know some things about living here. First, there is the heat. In high summer, you can experience temperatures in the 100s. That makes protecting your skin from the sun crucial, as well as fighting the heat with your home’s HVAC. In the winter, temperatures rarely drop below the 40s. There are many beautiful communities to live in, such as the Phoenix area, Casa Grande, and Goodyear. There is also a very strong job market for professionals and plenty of retirees in the state.
Research Can Make Your Home Purchase Simpler
Information is powerful when you are trying to buy a home. The more research you do about the real estate process, the fewer surprises there will be. Understand what loans you can apply to, discover the payment assistance programs that can increase affordability, remember the extra costs of closing and maintenance, and find a great community in Arizona to move to.