If you feel the Southwestern sun calling your name, you’re not alone: Arizona is the third-most populous state in the U.S., according to 2021 Census Bureau data. As more people flock to the Grand Canyon State, you may be wondering if you should buy a home there now or wait. Now is a great time to buy in Arizona if you can afford it. Things are starting to look better for buyers here, as home prices have risen throughout the pandemic. The number of listings in the state increased 14.6 percent last year, according to data from the Arizona Association of Realtors. And according to Redfin, in June 2022, more than 36 percent of homes had a price drop. Use this as your guide to figuring out where to live, what to look for, and how much to save to buy a home in sunny Arizona.
How to buy a house in Arizona
Decide where to live in Arizona
If you’re not tied to a city in Arizona for your job, it’s wise to compare housing prices and the overall cost of living in different parts of the state. As the largest city in Arizona, Phoenix is probably on your radar. If you’re looking there, expect fair competition: About a third of the homes there have recently sold above list price. Tucson is a great option with median home prices around $349,000 – lower than the statewide median. And it’s not just one of the best places to live in Arizona: Tucson is on Bankrate’s latest list of the best places to live in the entire US.
Tips for buying a home in Arizona
When comparing home prices in different parts of the state, it’s important to determine how much money you need to borrow. If the loan amount is more than $647,200, you need to compare options for jumbo loans. By 2022, Arizona’s harmonized loan limits are the same in every county. However, there are exceptions to FHA loan limits: While $420,680 is the limit for FHA borrowers in most counties, there are exceptions in high-value areas such as Maricopa County, where Phoenix is located, and nearby Pinal County.
Arizona-specific things you need to know
- Property Tax: An Arizona homeowner’s property-tax bill is not very high compared to the rest of the country. Data from the Tax Foundation shows that you can expect to pay 0.65 percent of assessed property value toward your annual tax bill, which averages out to $1,150 per household. It is important to compare different county rates though. Residents of Pima County, where Tucson is located, pay the highest property taxes in the state.
- Dual Agency: Like many states, Arizona allows dual agency, which means your real estate agent can represent the seller in your transaction. But if that’s the case, the agent is required to get your consent.
- Seller Description: The state requires home sellers to fill out an official form that discloses various information about the property. Read this document carefully to understand possible warning signs of existing roof leaks, HVAC system problems, and more.
- Closing costs: In the year In 2021, closing costs in Arizona will average $4,701 — or 1.2 percent of a home’s purchase price — according to data from the Closing Corporation. That figure doesn’t include lender fees, so some new homeowners may pay more for down payment or underwriting fees.
- Lawyers: Under Arizona state law, you are not required to hire a real estate attorney. However, it is wise to consult one: real estate transactions involve a lot of money and a lot of complicated legal language. So, unless you are an expert in checking contract details, an attorney is the wisest use of your money.
- weather and climate; Life in Arizona means basking in the natural beauty of the desert sun—but it also comes with some serious risks. According to the state Division of Forestry and Fire Management, more than 2,500 wildfires burned nearly 980,000 acres in Arizona in 2020. And despite the desert climate, flooding is a danger here. According to the Arizona Emergency Information Network, parts of the state experience between 40 and 100 floods each year. So, when comparing options for homeowners insurance in Arizona, consider additional coverage to protect your investment.
How Much Home Can I Buy in Arizona?
Before deciding how much to spend on a new Arizona home, you need to answer a more fundamental question: Are you ready to buy a home? If your credit is in good shape—at least 620, but a score of 740 is ideal—you’ve checked the most important piece of the puzzle. And remember that buying a home anywhere comes with additional costs beyond the purchase price you pay at closing, including title insurance, mortgage payments, lender fees, and more. Consider whether you will live in the home long enough to justify those transaction costs.
Are you ready to erase the numbers? The bank’s new-home calculator looks at your overall financial picture to help you set the maximum amount for your monthly mortgage payment.
Prepayment in Arizona
When you’re doing the math on what it takes to buy a home, one big question may worry you: How will you get enough money for a down payment? Well, if you’re a first-time homebuyer or qualify for a low-income homebuyer, you may have some help with this. For example, the Arizona Industrial Development Authority has a program called HOME+PLUS, which includes a three-year forgivable loan that can cover up to 5 percent of a home’s purchase price. You need to earn less than $112,785 a year and meet a few other conditions. Be sure to ask your real estate agent for advice as well. In some cities, buyers may receive additional down payment assistance if they purchase a home in a low-income neighborhood.
Get pre-approved for a mortgage
Now, you need to gather all the paperwork that shows why you qualify for a mortgage, such as pay stubs, tax returns, bank statements, and sources of income. You will need to share these with the lender to get pre-approved. Some lenders can provide a pre-approval letter within 15 minutes, while others may take a little longer. Either way, this document is an important part of showing a seller in Arizona that your offer is strong and that your mortgage application is more likely to be approved.
Find the right lender
Be sure to compare mortgage rates from multiple lenders to determine the right deal for your finances. Look at the APR, and ask what fees you’ll have to pay and how quickly each lender will close the deal.
You may also want to explore companies like Ribbon and Opendoor, which help support cash-backed deals. To a seller, cash offers can look more attractive than financing – helping you stand out if you’re competing with other home buyers.
Find the best local real estate agent in Arizona
Having a knowledgeable local real estate agent on your side can save you time: He or she can recommend properties that fit your needs and budget, so you don’t have to do the manual labor yourself. Agents will have a deeper understanding of the market and how quickly properties are contracting – a big help, especially if you’re buying a home outside of the home. If you don’t currently live in Arizona, look for the letters CRP (Certified Relocation Professional) next to the realtor’s name, which indicates that they are trained to provide the long-distance help you need.
Make a discount on the house
Now, it’s time to start looking for a home that feels like home. Looking for a single family home with lots of land? Or is a condo with no landscaping right for you? No matter where you’re looking to buy, there are plenty of options in Arizona: Available listings hit their highest number in more than two years in June.
While you’re house hunting, remember that real estate is very much a local game. In Mesa, for example, the median sales price is $460,000. It’s only 12 miles away in Scottsdale, but the median is over $800,000. No matter where you look, the growing number of homes in Arizona that are finally ready to move in speak of good news. As of June 2022, the typical home here will sell for 100.4 percent of list price — down 2 percent from last year.
Examination and evaluation
Once the offer is accepted, get a home inspection. Professional inspectors double-check the property for any potential issues, so you won’t have any unpleasant surprises once you get the keys. This typically happens within a few days of going into contract, and while it’s an optional expense, it’s some of the smartest money you’ll ever spend: You want to make sure the home you’re buying isn’t going to be a money pit. Repairs.
If you are financing your purchase, in addition to an inspection, your lender will require a professional appraisal. Appraisers appraise the home and assign a dollar value. If the appraisal is less than the price you agreed to pay, you must make up the difference (unless there is an exception to this).
Take the final walk and close on your new Arizona home
Before you become the official owner of the house, it is important to do the final walkthrough. This step is very quick as the seller is checking to see if there are any issues or surprises that the seller is releasing. If everything looks good, it’s time to close the house. Ask about the best method for paying closing costs—usually by certified or cashier’s check or wire transfer—and do some legwork before the big day, because you’ll need to sign many documents. Then, step out into the southwest sun: you’re now an Arizona homeowner.
