Have you been living in a rental unit for several years and you are starting to get tired of seeing your monthly payments go down the drain? Has your young family started to outgrow your current space, forcing you to seek out a better environment to live in?
Buying a home can be one of the most exciting milestones in your life, but it can also be one of the most stressful due to the high costs. There are plenty of benefits to owning a home, such as greater privacy, the ability to make improvements, and building equity, but it is easy to lose sight of these when you have to spend so much money before you even move in.
Starting to prepare for buying a home in Arizona should happen long before you are ready to sign a contract and take over a property from a previous owner. Here are some tips to help you get ready for a home purchase in the Grand Canyon State.
Learn About Home Insurance
When you take out a loan to buy a home, lenders almost always require that you have homeowner’s insurance on the property. This insurance helps protect your investment, which technically belongs to the bank until the loan is paid off. Home insurance generally covers things like lost or damaged belongings, injury liability, fire damage, storm damage, and structural damage. There is also a difference between home insurance and mortgage insurance. Mortgage insurance protects the lender from risky borrowers and is an extra cost you might need to pay if you cannot achieve a certain level of down payment.
Start Saving for a Down Payment
The down payment is a crucial component of a real estate transaction. The higher the amount you pay upfront, the lower your monthly payments will be. Also, if your down payment is large enough, you can avoid extra fees like private mortgage insurance. Saving up now will mean you have greater buying power once you find a home in Arizona to purchase. Consider creating a high-yield savings account that will only be used for a down payment. Take on a side hustle to increase your total income. Cut unnecessary spending from your budget and consider meeting with a financial advisor who can give you a good insight into your options.
Determine What Type of Loan to Get
Society is benefitted when more people are homeowners, so there are many loan options for those who are looking to purchase a house. It all depends on your life circumstances. If you are a veteran, active military, or surviving spouse, a VA loan can provide you with great perks like no down payment requirement and a lower interest rate. If you meet FHA loan requirements in AZ, then you can still afford a home even if you have a lower income or poor credit score thanks to support from the federal government. When you want to buy a home in a rural area of the state, but have a limited income, then USDA loans can assist you. Conventional loans are the answer for families that have good credit and enough capital for lenders to trust.
Do NOT Waive the Inspection
The last few years saw a little bit of chaos in real estate markets across the country. Home prices skyrocketed, making it tougher for many buyers to afford the houses they wanted. As a result, many of them chose to waive the inspection in favor of a lower price. Do NOT make this mistake. There are very few circumstances where this would benefit you. The inspection is crucial, as it can reveal any flaws in the home or potential repair issues. Finding out about these problems just after moving in would be devastating, especially after spending so much money already. No matter what the offer is, make sure the home is inspected before you agree to buy it.
Know the Hidden Costs of Buying a Home
The more you know about what it costs to own a home, the better you can budget for it. Some buyers are unaware of hidden costs like the closing costs for a real estate transaction or the utilities. Maybe the cost of heating or cooling their home is greater than they expected. There are also other bills like garbage pickup, internet, and homeowner’s associations. Plus, there is the cost of ongoing maintenance and repairs that tend to spring up every year. By understanding the spectrum of hidden costs associated with homeownership, you will be better prepared to deal with them when the time comes.
Buying a Home Means Greater Responsibility
When you decide to become an owner of a residential property in Arizona, you are taking on a greater level of responsibility. Essentially, you become a caretaker in addition to being an owner. It is up to you to take care of the home, keep it safe for you and your family, and invest in it. As you build equity with mortgage payments, you can take advantage of the ownership stake to refinance or sell in the future. Follow the tips listed above to prepare for the homebuying process effectively.