6 Essential Steps Before Beginning the Home-Buying Process in Arizona

Are you considering buying a home in Arizona in the next six to 12 months? Reviewing your lending options and getting your finances in order now can help you prepare for this big step. Use this guide to prepare your finances for a flawless home-buying process with 6 essential steps before beginning the home-buying process.

1. Understand Your Credit Score

Many months before buying is the ideal time to check your credit score. This gives you time to make any necessary improvements. If you don’t plan to buy for six to 12 months, you have time to improve your score, which can earn you a better interest rate. Continue making installment loan payments on time. Pay down as much of your credit card debt as possible.

Lenders consider debt to income ratio when deciding whether or not to approve you for a mortgage. This refers to how much debt you have in relation to your income. It’s also important to note that maintaining your credit is crucial during this time. Avoid taking out any additional debt, as this can affect your debt-to-income ratio and make it more difficult to obtain a mortgage.

2. Save for a Down Payment

You should also begin saving for a down payment. How much down payment you’re required will depend on the loan type, but it’s usually somewhere between 3-20%. How much you have saved for a down payment can also affect your interest rate, which is the cost of borrowing money. Also, some sellers may consider the down payment amount when choosing which offer to accept.

Begin now putting money aside into a separate account. Leave this money until you’re ready to close on your new home.

3. Create a Home Buying Budget

Now is a good time to narrow down your housing options and evaluate what you want. Consider what amenities are most important to you in a new home. Review homes currently for sale to get an idea of what you can expect to pay. Narrow down your list to include locations, housing type, and number of bedrooms and bathrooms. 

Make a list of must-haves, nice-to-haves, and less important features in a home. Understanding what you want when shopping can help your realtor find you the perfect home. It can also help you create a realistic budget so you know how much you’re willing to borrow.

4. Contact a Mortgage Lender

It’s not too early to talk with a mortgage lender. Your mortgage lender can prove to be a valuable asset through all steps of the home-buying process. They can review your credit score and provide direct feedback on what to improve. A mortgage lender can also help you review and choose the best home loan. You have many options available when it comes to home loans, and you want to choose the one that best fits your financial situation. Your mortgage broker can also connect you to realtors in your area.

As it gets closer to your home shopping date, your mortgage broker may also issue you a pre-approval. While a pre-approval doesn’t guarantee lending, it does show sellers and realtors that you’re a serious buyer. A pre-approval claims that you’re likely to be approved for a mortgage. Additionally, your pre-approval will show the amount you’re likely to be approved for with a mortgage, which can help you shop among homes within your buying budget.

5. Choose a Good Real Estate Agent

There are many benefits to working with a real estate agent. In addition to realtors understanding the local market, they’ll also play an important role in negotiations. Your real estate agent can help you evaluate the best offer price and whether or not a home is worth the asking price. Your realtor can also connect you to other important services in Arizona, like a home inspector or land surveyor.

6. Get Ready to Close

The home-buying process can take many months. Or it can take a few weeks. You may get lucky and find your dream home within one of the first showings. If so, you’ll want to be prepared to close. This includes having your down payment ready. It also means having an earnest money deposit (EMD) ready. Including EMD with your offer shows the seller that you’re serious and interested in their property.

Buying a home can be exciting, but it can also be overwhelming. Taking a few steps now, before you’re ready to buy, such as saving for a down payment and narrowing down your wants in a home, can help you enjoy the process. Researching loans ahead of time can also save you some time and get you the pre-approval you need to begin home shopping.