Congratulations! Now that you’ve made the decision to join the ranks of homeowners, you need expert guidance to find the right loan, the perfect location, and the resources to help you settle in and make the house your home. Here are some general guidelines, but your agent can give you more specifics and help you through the process with the greatest ease.
Get Pre-Qualified Your first step should be to get pre-qualified for a loan. This will help you understand your options for a down payment, as well as help focus your efforts on looking at properties you can afford. During the loan application process, your lender will ask you for personal information. You can help speed the process by gathering some of it in advance. You are likely to need your last two years’ tax returns, and your most recent two pay stubs. Your lender will process your credit report, and ask you to complete an application, then will investigate various loan programs that might be available for you.
Government-backed loans through the Federal Housing Authority (FHA), Fannie Mae and Freddie Mac all offer lower down-payment options, and there is even a loan that will allow you to wrap any costs to remodel the house into a loan. If you are a Veteran, VA loans are a great way to go. Please note that most FHA loans are available for homes priced below a certain price point, so check with your Realtor for the limits in your area.
Conventional loans usually require a minimum of 20% down payment. If you can’t qualify or the house costs more than the FHA loan limits, a conventional loan is probably your best option. Interest rates are at a historical low, so it’s a great time to buy and lock in a low interest rate for the full term of your loan.
Adjustable rate loans are also available. These loans allow you to pay a lower monthly payment during the first few years you own the home (usually 3 or 5 years) but then the interest rate can go up based on market conditions.
Focus on Your Wants and Needs It’s always tempting to look for everything you have ever dreamed of having in a home, but keep your budget and your requirements in mind. Make a list of the features you absolutely have to have—how many bedrooms? Bathrooms? Garage spaces? Distance from work or school?
Once you have the minimum requirements, you can add some of your desired items—would you really like a pool? Or a larger lot? Keep in mind that you may find some homes that have one or two of these extra %u2015desirable items, but make sure the home has your essentials first! It’s easy to get overwhelmed by the features, and forget the basics.
Start Looking at Properties Now that you know what you can afford, and what absolute essentials you must have in a home, it’s time to start look-ing! You may want to begin by looking at websites on the Internet. This is a great way to see what is available, and get a feel for the type of neighborhood or area of town that might be best for you. A word of caution, however: many websites are not associated with the local MLS and may have outdated information, so once you begin to focus your search, find a Realtor you are comfortable working with, and let him or her help with your search. You can find many great Realtors right here by clicking on the 'Meet Our Team' tab.
Working With Your Agent Once you find the real estate agent you want to work with, ask lots of questions! Your Realtor is an expert in the area, and can help you focus on areas of the Valley that will meet most of your needs and desires.
As you tour homes with your agent, make notes on each house you see. After you’ve seen multiple homes in a day, they all start to blend together. Keeping notes on each property as you tour will help you remember what you liked about each home—and what you didn’t like. Tell your agent what appeals to you so he or she can focus future tours only on properties that will meet your needs.
You may drive by numerous homes that your agent will not show you. There are many reasons for this– the home may already be under contract, the price may be beyond your budget, or the home doesn’t meet your needs. Trust that your agent has your best interests in mind, and will only show you what will work for you.
Making An Offer Once you find that ideal house, it’s time to make a purchase offer. Your agent will review the Arizona Purchase Contract with you, and help you understand the buying process from this point forward.
You will be required to submit a Pre-Qualification letter from your lender with most offers—your agent can work with your lender to prepare this. Each Pre-Qualification letter is specific to the property you are making an offer for, so it cannot be prepared in advance.
When your offer is presented to the seller, the seller may decide to issue a counter offer to the price or terms you offered. Your agent will help you review any counter offers, and discuss the implications with you.
When negotiations are complete and you and the seller have agreed on price and terms, you will need to provide a check for an Earnest Money deposit. These funds are deposited with the title company specified in the purchase contract, and can later be used to pay for part of your down payment or closing costs.
The Escrow Process Once you and the seller have agreed on terms, you have a period of time to perform any inspections you think are important—a home inspection, termite inspection, structural inspections, roof inspection, pool inspection, etc. At a minimum you should have a home inspection done by a qualified home inspector. In Arizona, home inspectors are certified and must meet minimum performance standards.
A home inspection may point out certain issues with the home (such as electrical or plumbing problems, roof repairs needed, etc.)
Once you have reviewed the report prepared by the home inspector, you can ask the seller to make repairs. The seller may respond by indicating they will make all repairs, just some of the requested repairs, or may refuse to make any repairs. Once you receive their response, you have an opportunity to decide if you wish to move forward with the purchase.
During this period, you also need to finalize your loan, and if necessary, lock in your loan rate. Speak with your lender about the best time to lock your rate, as loan rates fluctuate almost daily, and your lender has the best idea of where rates may be going in a few days or weeks.
You also want to plan your move. Keep in mind that the Close of Escrow date may change by a day or two, for any number of reasons. It is best to give yourself a day or two after close of escrow before you hire the moving company, painters, etc. Don’t count on moving in or having any work done to the house on the day you are scheduled to close escrow.
A few days before the scheduled close date, your lender must send final loan numbers to the title company, who will prepare a Settlement Statement. This will indicate for you how much money you will need to bring to the closing table—and it must be in the form of a cashier’s check, so make sure the funds are available and arrange to get the check in advance!
You will need an appointment with the title company to go in and sign the closing paperwork, which includes lots of documents, including your loan documents. Set aside at least an hour for this process, and don’t be afraid to ask questions—this is a large financial transaction, and it is important that you understand your commitments.
The seller will also sign paperwork, but in Arizona the buyer and seller generally do not sign at the same time.
Once the title company has all paperwork signed, has received the down payment from you, and the remainder of the purchase price from your lender, the title company will record the transfer of the property to you. This is considered the official Close of Escrow, and you will get the keys and own the property.
Packing and Moving As you prepare to move into your new home, organize your packing to make it easy for you to get settled in. Purchase packing supplies and start packing non-essential items early. Label each box with a general description of its contents, and indicate which room in your new home it should be taken to.
If you plan to hire movers, make sure to contact them at least 3 weeks prior to your scheduled move. At the end of each month, moving companies tend to get booked quickly, so plan ahead!
As you approach the time of your move, plan to pack an emergency supplies box. Move this box in your car so you have access to it immediately upon arrival at your new home. We recommend you put the following items in your emergency box:
Paper plates and plastic utensils
Napkins and/or wetnaps
Tape, scissors and pens
Roll of toilet paper
Pet treats , water dish and food for your pet
A small first aid kit
Bottled water or other drinks
Any other essentials you may need immediately at your destination
There are still newly constructed homes throughout the Valley of the Sun, and your Realtor can help you locate them and negotiate the best deal. If you are interested in purchasing a brand new home, your agent has access to information about where these homes are located, what floor plans will work for you, and whether the builder had any spec (speculative, or pre-built) homes available.
Your Realtor will accompany you to new home communities and is happy to show you the models or spec homes. He or she will also negotiate with the builder to get you the best price, the most options, and the best terms. Keep in mind that if you go to a new home community without your representative, the builder will not work with him/her later on, so you will be negotiating on your own (and the on-site salesperson represents the builder, not you).
If you choose to select a lot and have a new home built, keep in mind that it may take 6 to 12 months to complete. It is difficult to determine an exact time to complete your new home, so try to be flexible with your current living arrangements, and don’t count on moving on the exact date you are given when you sign a purchase contract.
Most builders in the area use their own purchase contracts, and the terms may be substantially different from the standard Arizona purchase contract, so make sure you and your Realtor understand the differences before you sign.
Throughout the Valley, there are wonderful areas if you are looking for a vacation home or a second home. We have many home-owners who enjoy our ideal weather during the winter months, and we're happy to show you how you can be one of them!
Homes in Arizona can be low maintenance due to our desert environment, and 'lock and leaeve' is a favorite saying around here. You may prefer a gated community, where there is extra security when you're not in residence. There are many condo and townhome communities, as well as single-family homes available to you.
Would you prefer a location in the center of town so you can walk to shopes and restaurants, or is a more rural environment, where you can watch the quail and hear the coyotes sing, more your style? No matter what you dream of when you think of owning a home in Arizona, we can help you find it!
Some areas of the Valley are known for their grand estate homes. Whether you're looking for a close-in location with easy access to shopping, dining, and entertainment for a more pastoral setting where you can wander your land and enjoy the desert surroundings, our experienced agents can help you find it.
Purchasing a foreclosed home (or REO) can be very cost-effective, but there are considerations you need to make if you’re buying a foreclosure property:
You will make an offer to purchase using a standard Arizona Purchase Offer form, but the bank is likely to counter with their own, very specific contract.
When you make an offer, it usually takes the bank 3-7 days to respond to you, so be prepared to wait a little longer than usual for a response.
If the utilities (electric, gas, water) were not on when you visited the property, it is unlikely the bank will turn them on for you to do a home inspection. You will be responsible for turning the utilities on for any inspections you do (and to pay for the cost). Some utilities will do an emergency turn-on service for you—check with your Realtor.
Foreclosed homes are sold in 'As Is' condition—meaning the bank will not make any repairs.
The bank may occasionally agree to replace missing items (air conditioning condenser, range, etc.), but don’t count on it—this is dependent on each individual bank. Our agents have worked with most of these banks, and can proba-bly give you a good idea whether the current bank/owner has been willing to replace items in the past.
Banks will generally not provide you with a Seller Property Disclosure to explain any repairs made to the property, since they have never lived in the house.
Banks will usually not provide you with lead-based paint information for the same reason.
If the property has a septic or alternative waste treatment system, the bank will provide only limited inspection/certification and transfer funds.
Many banks want a closing as soon as possible, so the time you have available to finalize your loan and make your plans to move may be shorter than normal. Most banks want to close within 30 days.
RE/MAX Fine Properties strives to improve your home buying experience. We understand that you don’t always hear about trends in the market, may need to investigate alternatives to the traditional purchase of a home (like a Short Sale or Foreclosure), or are simply looking to increase your knowledge. Please browse through the resources we offer, and if you need additional help, let us know - we’re here to help!
Buying a new or pre-owned home requires an in-depth knowledge of the local market you are considering, as well as a broader understanding of where the real estate market is going. These days, it is easy to find specific properties that meet your criteria - just by going to the Internet. But consideration of the finer details still requires feet on the ground - whether yours or those of your trusted real estate partner.
At RE/MAX Fine Properties, we give you the tools to start your search through our general Search functions, provide you the ability to identify specific areas of interest based on our Communities information, help you consider all the options available to you, and will be your eyes and ears when necessary to help you identify the perfect environment and perfect house for you!
Buying a Resale Home
Resale, or pre-owned, homes abound throughout the Valley. In today’s market, you’ll find three predominant types of processes:
The 'Traditional' sale, where buyer and seller agree on price and terms and close escrow
A 'Short Sale' wherein the seller owes more on their loan than the property is worth. In this case, the buyer and seller would agree to price and terms, but the seller then must gain approval from their lender to accept less than their loan amount.
A 'REO', or real-estate owned, sale is one in which the home has been foreclosed by the bank, and the bank is re-selling the property.
Traditional sales tend to be the most straightforward and can close escrow fairly quickly. Short sales will take additional time, since the bank must approve the contract terms and verify that the seller has a valid reason for 'selling short'. A Short Sale can take from 30-180 days or more to gain bank approval and move toward close of escrow. REO, or lender-owned, home sales can be quick, since the bank already owns the property and has probably established the sale price in advance.
A fourth option is to purchase a home at a Trustee Sale. This is the point at which a bank is foreclosing on the property, but will sell it to the highest bidder who offers a price the bank feels they can accept. Trustee sales are very popular with investors, but do require that the buyer pay cash for the purchase within 24 hours of the sale.
Keep in mind that in the case of Short Sale and REO properties, the home is usually sold in 'As Is' condition, so no repairs will be done by the seller, and you will receive no warranties that major systems (like air conditioning or heating) will be in working order.
When purchasing a resale home, consider buying a Home Warranty plan. A Home Warranty will cover the cost of repair or replacement of most major systems within the home for a period of one year after you purchase. The cost generally runs $500.00 to $750.00 but can save you a significant amount if just one major system (like your air conditioner) malfunctions. There is a service charge for a repairperson to come investigate, but it is usually $55.oo to $75.00. The cost of he home warranty is negotiable, so you can request that the seller purchase the warranty for you.