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Financing Your Home in Scottsdale

Ready to purchase real estate?  Before you start house hunting, prepare for the process by taking a few preliminary steps as outlined below.  If you have any questions or would like a recommendation for an excellent mortgage consultant, please Contact Mike »

Steps to Purchasing a Home in Arizona

Select the link to see the information for each step.

 

Mortgage Pre-Approval - The Loan Status Report

In Arizona when an offer is submitted to purchase real estate, the offer must be accompanied by a Loan Status Report (LSR). The LSR is signed by a lending institution stating that the Buyer is prequalified in one of several ways as follows:

1) - The lender has spoken with the Buyer and has verified credit worthiness.

2) - In addition to the above the Buyer has completed a Loan Application.

3) - In addition to the above the Buyer has submitted paperwork to the Lender showing the validity of information on his/her Loan Application.

One common trait of the above is that the Lender will qualify you up to a certain dollar amount - how much they are willing to lend you for your home purchase. It is highly recommended to find out this level before you start looking at homes to be certain you don't find a home and fall in love with it only to find that you can't qualify for a loan at that price level. Additionally, you will only delay the ability to submit an offer if you don't have this form completed in advance.

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Determine Your Credit Score

Having an established credit history is very important.  There are a number of ways to establish good credit including paying your bills on time, using credit cards wisely, etc. A good step in the home buying process is to find out your credit score. Be sure to verify the accuracy of the information in your credit report. Your lender will be able to run a credit report for you as well and this information will be utilized in determining not only their willingness to loan you money but at what interest rate. The higher your credit score the less the interest rate you will be required to pay.

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Financial Calculators

There are a number of easy-to-use financial calculators online to help you determine what your payment would be for a certain price home.

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Choose a Realtor Professional

Buying a home is one of the most important decisions of your life and yet many people use whatever Realtor they happen to know through family or friends. Better is to find an experienced real estate agent who understands the area you are looking to move to and has the experience, credentials and references you will need during negotiations, escrow process and closing. I hope you will consider me for all your Realtor needs.

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The Downpayment

The Downpayment is the amount of cash that you pay up front when purchasing a home and thus the amount you borrow (your mortgage) will be the purchase price less your downpayment plus closing costs (see information below on these items).

Typically you will put from 5 to 20 percent down on a house but there are many factors involved and loans are available today allowing the entire purchase price to be borrowed. Consult with your lender for additional information.

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Your Mortgage

There are numerous types of mortgages (would you believe hundreds?) available today to the Home Buyer. The main types are listed below:

  • Conventional Mortgages - These would be non-governmental and have a maximum loan amount (currently $322,700) that you can borrow under this type of mortgage.
  • Jumbo Mortgages - Similar to the above yet the loan amount is over the conventional loan limit.
  • Fixed Rate Mortgage - Basically a mortgage type where the interest rate doesn't change over the entire life of the loan (such as a 30 year, fixed rate loan).
  • Adjustable Rate Mortgage (ARM) - As opposed to a Fixed Rate Mortgage, the interest rate on an ARM is usually tied to an economic index and can vary over time.  As a result, your payment may also vary at intervals of time depending on the fluctuations in the market.

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The Escrow Process

When you place an offer on a home and the Seller accepts the offer, your Realtor will assist you in "opening escrow". This involves a Title Company such as First American Title who initiates a Title Search to make sure that the Sellers have clear title to the home you are buying. The Title Company typically holds your Earnest Monies in trust and communicates with you, your lending company, your Realtor, the Sellers Realtor and other parties such as home inspectors that may be involved in the purchase.

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Closing

On a date approved in the original Purchase Agreement between the Buyer and Seller and after all home inspections have been completed and loans funded by any lending institutions, the Closing takes place.  This is usually at an office of the Title Company and your Realtor would generally accompany you to help verify no errors have taken place in the Closing Costs.  These are the costs that are paid by either the Buyers or Sellers prior to the recordation of the deed.

For Buyers, these Closing Costs would include such items as Appraisal Fees, Lender's Fees, etc. 

Information IconSee a more extensive listing of Buyer's Closing Costs

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