Getting ready for buying your first house in Phoenix AZ
For most people, buying a home is the biggest financial transaction in your life. Before you jump into the wonderful world of homeownership make sure you are prepared, willing, ready and able to buy.
Buying your first home takes time, desire, preparation and commitment. It is not only to navigate the complicated and time-consuming purchase process, but also to learn and become a responsible homeowner.
Photo by RDNE Stock project from pexel
The first thing to do before buying a home is to make sure it is the right time to do so, based on your unique situation. Generally speaking, owning a home will pay off financially if you will live in it for at least five years – seven years. Your actual numbers may vary, but you can play with scenarios with our rent vs buy calculator.
Here are list of item to get you prepare to become homeowner.
Strengthen your credit score
You may already know, Credit scores have become more important than ever. Our financial institutions use credit scores in evaluating requirements for mortgage. The higher your credit score, the better rate you will get, hence lower your monthly payments.
While you can get a mortgage at 640 – 660, if you have 700 – 720, you will get a good deal. Improve your chances by: pulling your credit reports and ensuring you are not being unfairly penalized for old, paid or settled debts. If you found any error, you will have time to correct it. Remember that it takes time to improve your credit score, so start today if you need to.
How much you can afford
Get a home that you are financially comfortable. Buy a home because you and your family want a house. You should never stretch to buy your primary residence. Only buy a house that you can afford today! Keep your total housing payment under 30 percent of your gross monthly income. When you spend much more than that on your mortgage, you risk becoming “house poor”.
Suggested: How Much I Can Afford to Buy a House in Phoenix AZ?
Trying on that financial obligation long before you sign the actual mortgage papers to avoid “payment shock”. Calculate the mortgage payment for the home in your intended price range, along with the increased expenses (such as taxes, insurance and utilities). Then bank the difference between that and what you are paying now. This will let you “experience” the lifestyle you want with your new home. If the payment start getting stretch, you still can “back away from it” or scale back”.
Save for down payment and closing costs
In addition to making sure your credit score is in order, you’ll also want to consider the cash you’ll need to on buying your first home. Of course there’s your down payment — typically between 3.5 and 20 percent of the purchase price, depending on what type of your financing.
Also read: How Important Is Your Down Payment When Buying a Home in Phoenix AZ?
And as you save, don’t underestimate how much money you will need, such as closing cost. You might be surprised at how much cash you will need out of pocket for closing over and above the down payment amount.
You may ask: What is Closing Cost when buying a home in Phoenix AZ?
Build a healthy savings account
On top of saving for your down payment and closing cost, you need to build up your saving. You want to show your lender that you are not living paycheck to paycheck. Lender would like to see you have saving as reserve for mortgage payment.
A lot of people forget that there is a lot of maintenance and repair with owning a home, especially if you’ve been used to renting. That money will also help cover maintenance and repair issues that come up when you own a home. While repairs are sporadic, items such as a new roof, water heater or other big-ticket items can hit suddenly and hard.
Get pre-approved for a mortgage
After you get everything into order, you are emotionally ready and committed to buy, you want to get financing in place and qualifying for loan. Get your documentation in order and ready. Begin to collect documents that you’ll need to verify your financials on the mortgage application: paystubs, W-2’s, bank statements and, if you have freelance or self-employment income, copies of your last two tax returns.
As a buyer, it is critical that you provide the possible lender with all of the documentations they need to give you a true and accurate assessment of your financial abilities to pay a mortgage. Pre-approval amounts will be dependent on your ability to pay and the payment history that you have. You want to make sure you get pre-approval rather than a pre-qualification letter. A pre-qualification is simply a quick assessment on your ability to jump into the real estate market. The pre-approval letter will show exactly what house for sale in Phoenix that you can actually afford with your current budget.
Talk to different mortgage brokers and bankers. Mortgage pre-approval is a free and non-binding process that presents you to sellers as a serious and qualified buyer when buying your first home.
What is the Timeline when Buying a Home in Phoenix AZ?
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