People are flocking to Arizona in droves. Can you blame them? The beautiful natural landscape, warm weather and breathtaking sunsets are some of the reasons why people are fleeing other states to settle in Arizona.
According to the United States Census Bureau, Arizona’s population increased by nearly 12% over the past decade and is the seventh fastest-growing state in the nation.
As a result, the housing market has exploded and has become immensely competitive. The real estate brokerage Redfin reports home prices in Phoenix, Arizona’s most populated city, have skyrocketed by 30% compared to 2020, and the median price hovers around $400,000.
Whether you are looking to purchase your first property in Arizona or just moving to a different part of the valley, it’s crucial to understand the intricacies of Arizona real estate. Discover some of the most important things to consider before securing a house in the Grand Canyon state.
Understanding The Arizona Real Estate Market
Although the real estate market can frequently fluctuate, understanding the current market for a particular state can help you with the homebuying process. The real estate market is classified as either a seller’s market or a buyer’s market.
A seller’s market refers to a market where there are more buyers than sellers. In this type of market, the seller has control, and if the seller doesn’t like your bid, there is most likely someone ready to offer a higher value. On the other hand, a buyer’s market refers to there being more sellers than buyers. In this situation, the buyer has more control since people are probably not lining up to make an offer.
Real estate trends and reports indicate that Arizona is currently in a seller’s market, and experts expect the upward trend to continue for at least the next 12 months.
The Phoenix metropolitan area is very competitive. Redfin reports that homes in the valley of the sun receive approximately five offers on average, and a house remains on the market for roughly 23 days.
Evaluate Your Financial Situation
Before housing hunting, in general, but especially in a seller’s market, it’s important to evaluate your financial situation to understand how much you can afford. A lot of Americans need to go the mortgage route when purchasing a home. If you plan to apply for a home loan, understanding your financial situation may put you in a good position to make a solid offer.
Get a Mortgage Preapproval
Mortgage preapproval can tell you how much money you can borrow. While getting a mortgage preapproval is not required when purchasing a home, getting one in a competitive market is imperative. Getting preapproved may help you shop smarter and make better offers. Additionally, sellers may not consider your offer in a competitive market if you don’t have a preapproval letter.
Lenders will look at your income, assets and credit score to determine what types of loans you are eligible for and how much you can borrow.
So, how do you get preapproved for a mortgage? The mortgage preapproval process is straightforward. You’ll need to fill out an application, and you may need to provide the following information:
- Employment verification
- Credit history
- Proof of income
- Debt-to-income ratio (DTI)
- Pay stubs
- Tax documents
- Other financial records
Understand Your Financing Options
Once you’ve received a preapproval letter, the lender will provide you with a list of the home loan options that you qualify for. However, it’s important to know what types of financing options are available to you.
Here are some of the most common home financing options and some that are specific to Arizona:
- Conventional loans: One of the most popular mortgage options. A conventional loan is a mortgage that the federal government does not insure. However, it’s a conforming loan, which means the loan meets the dollar amount set by the Federal Housing Finance Agency (FHFA). Requirements for the type of loan are generally a credit score of 620 and DTI that doesn’t exceed 50%.
- Fixed-rate mortgages: This type of home loan allows the borrower to keep the original interest rate throughout the duration of the loan. Fixed-rate mortgages generally are offered with a 15-year or 30-year repayment window.
- Adjustable-rate mortgages: With an adjustable-rate mortgage (ARM), the interest rate may fluctuate depending on the market. Generally, ARM’s are offered with a 30-year repayment period. The introductory period may have a fixed interest rate.
- Government-insured mortgages: The federal government is not a lender, but specific agencies do back loans. Some of the most common government-insured loans are FHA loans, USDA loans and VA loans.
- Home Plus Arizona: This program does not provide home loans. However, this program is designed to help lower-income individuals or families with their down payment. Home Plus Arizona is offered through the Arizona Housing Finance Authority, and they can provide down payment assistance to Arizona residents up to $19,200.
- No Down Payment Mortgage: Several lenders across Arizona offer no down payment mortgages. However, Arizona Central Credit Union may offer one of the best no down payment mortgages called the 80/20 mortgage. This home loan makes homeownership easier for all residents of Arizona. Check out the 80/20 mortgage webpage for more information.
Consider Arizona Central Credit Union As A Mortgage Lender
Buying a house in Arizona may be a great investment for you and your family. Understanding how the homebuying process works can put you in a good position to secure a house in a timely fashion.
Arizona Central Credit Union has provided Arizonans with affordable mortgages for nearly a century. We understand the mortgage process can get confusing. That’s why we aim to make the process as simple and straightforward as possible. If you are in the market for a home loan, consider us as your next mortgage lender. We offer a variety of home loans to individuals and families to make homeownership a dream to a reality. Visit our website or contact us today to learn more about mortgages.
