FHA loans? Down payments? Closing costs? Buying a home for the first time means you probably have lots and lots of questions. Choosing the right mortgage company can make the process easier.
We’ll take a look at some of the best mortgage companies in Arizona when you buy your first home. We’ll also go over some of the different types of mortgages you can qualify for as a first time buyer, current mortgage rates and what to expect when you close on your loan.
4 Best Mortgage Lenders in Arizona for First Time Buyers
Let’s take a look at some of the best lenders for first time buyers in Arizona.
1. Best Overall: Rocket Mortgage®
You’re probably looking for the easiest and least complicated way to apply for a home loan if you’re a first time buyer in Arizona. Rocket Mortgage® is a first time buyer’s best friend. This mortgage company has simplified the mortgage application process — you can even complete the mortgage application on your phone.
Rocket Mortgage® offers nearly every type of home loan you could need, including FHA loans, USDA loans, VA loans and jumbo loans. Its online education center also includes a vast amount of information that can make buying a home easier.
2. Best for Low Credit Score: Keller Mortgage
Your credit score significantly influences your ability to get a mortgage loan. If you’re still working on building your score but you don’t want to wait to buy a home, consider a loan from Keller Mortgage. Though most companies require borrowers to have a 620 credit score to qualify for a conventional mortgage loan, you may be able to qualify for a loan with a score as low as 600 points through Keller Mortgage.
Keller Mortgage also offers FHA loans, which can help you buy a home with a score as low as 500 points, depending on your down payment.
3. Best for Comparing Interest Rates: better.com
Calculating your interest rate is an essential consideration when you decide if you’re ready to buy a home. But interest rates change on a daily basis, so how can you accurately figure out how much you can expect to pay when you apply for a home loan?
better.com is focused on helping you get the lowest interest rate possible on your conventional or FHA loan. You can see how much you’ll pay on your loan without the commitment of applying for a preapproval when you use better.com’s up-to-the-minute interest rate calculator. If you find a better deal elsewhere, better.com will even beat a competitor’s offer thanks to its Better Price Guarantee. Want to pay as little interest as possible? Of course you do. Be sure to consider better.com.
4. Best for In-Person Service: Chase
Does the personal touch of visiting a bank give you peace of mind? Consider applying for your home loan through Chase. The largest mortgage provider in Arizona, Chase currently operates 228 offices in Arizona. This means that no matter where you are, there’s bound to be a location near you. Chase offers both conventional and government-backed mortgage loans, as well as one of the fastest average closings in our review.
Chase also effortlessly combines both online and traditional mortgage processes. You can begin your application online and finish with a representative or you can visit your local branch and complete the entire application process.
The Housing Market in Arizona: An Overview
Before we go over the details of buying a home, let’s take a look at the current housing market in Arizona.
Total Households: 1,901,327
Median List Price: $280,000
3 Most Expensive Cities in Arizona to Buy a House:
- Paradise Valley
- Fountain Hills
3 Most Affordable Cities in Arizona to Buy a House:
- New Village
- South Mountains
Preparing for a Mortgage
Getting a mortgage loan begins with applying for preapproval. A preapproval is an estimate from your lender that tells you about how much money you can afford to spend on a home. You should get preapproval before you start to shop for a home to ensure that you stay within your budget.
Follow your lender’s specific application process when you apply for a preapproval. You’ll enter a little information about where you live, your household income and credit information. Your lender will usually ask you to submit a few documents to verify your income. As a general rule, you’ll need to provide at least:
- 2 paystubs
- 2 W-2 forms
- 2 months of bank statements
You may need to provide additional documentation if you’re self-employed, such as your entire last tax return and a profit-and-loss statement from your business.
Your lender will also check your credit report before it issues you a mortgage loan. Your credit score plays a major role in your ability to get a home loan. Each lender sets its own minimum standard for credit scores. Here’s the minimum score you’ll need to get a loan with a few of Arizona’s top lenders.
Let’s take a look at a few different types of loans you can use to buy a house.
Conventional mortgages are the most common type of home loan. You can use a conventional loan to buy any type of home and anyone can qualify as long as you meet your lender’s standards. As a general rule, you’ll need a credit score of at least 620 points and a down payment of at least 3% to qualify for a conventional loan.
FHA loans are insured by the Federal Housing Administration. They were invented to make homeownership more affordable if you have a lower income and/or poorer credit. You can qualify for an FHA loan with a score as low as 580 points and a down payment of 3.5%. Your home must meet minimum livability standards to qualify for an FHA home loan.
USDA loans are insured by the United States Department of Agriculture. Your home must be in a qualified rural or suburban area to apply for a USDA loan. You can buy a home with no money down and a credit score of 640 points. Your total household income must also be lower than the income limit for your ZIP code by the USDA.
VA loans are insured by the Department of Veterans Affairs. You can buy a home with $0 down and a credit score of 620 points with a VA loan. You must also meet service requirements. Your home must also meet minimum livability standards.
Jumbo loans exceed the conforming limit set by mortgage investors Fannie Mae and Freddie Mac. If you want to borrow more than $510,400, you’ll usually need a jumbo loan. Jumbo loans have stricter standards than most other types of loans because they’re riskier.
First Time Home Buyer Programs in Arizona
You may qualify for government assistance if you’re buying a home for the first time. Let’s take a look at a few first time buyer programs for Arizona residents.
Arizona’s Home Plus
Arizona Home Plus is a program that offers affordable 30-year fixed-rate mortgages for residents who may otherwise have difficulty qualifying for a loan. You might also qualify for down payments and closing cost assistance, depending on your income. To qualify, you must buy a home in Arizona, intend to live in your new home as your primary residence and complete a home buyer’s education course.
HomePath Ready Buyer Program
The HomePath Ready Buyer program allows first time buyers to purchase a Fannie Mae-owned foreclosure with as little as 3% down. You can also apply for up to 3% of your closing costs Fannie sells the foreclosures in as-is condition, so you might need to budget for a few repairs before you invest. However, if you’re shopping on a lower budget, a HomePath home can be a great choice. You must first complete a buyer education course.
Good Neighbor Next Door
Are you currently employed as a teacher, firefighter, emergency technician or law enforcement professional? If you are, you might qualify for HUD’s Good Neighbor Next Door program. Good Neighbor Next Door allows select public employees to purchase a HUD-owned property for 50% off. These properties are already deeply discounted and sold in as-is condition. To learn more, check out HUD’s program page here.
Current Mortgage Rates in Arizona
When you get a refinance quote or purchase quote in your preapproval letter, your lender will also tell you what percentage interest you’ll pay on your loan. Each monthly mortgage payment includes 2 parts: principal (money you pay back towards the balance you borrow) and interest (additional money that goes to your lender).
No matter what type of loan you choose or lender you borrow from, you’ll pay some form of interest. Most lenders calculate interest as a percentage of your principal balance remaining. The specific percentage you’ll pay in interest will depend on a wide variety of factors, including your credit score, down payment, the current state of the local housing supply and even the overall bond market.
Interest rates change on a daily basis. We update our tables frequently to ensure that you’re getting the most up-to-date information possible. Let’s take a look at current mortgage interest rates in Arizona for 3 of the most common loan types.
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Closing a Mortgage
You’ve gotten a preapproval, found the right home, made an offer and gotten an acceptance from the seller. There’s nothing left to do now other than decide how you’ll decorate your new home — right?
After you get a purchase quote and an acceptance from a seller, you must go through the closing process. The specific steps you’ll go through before you close will depend on your lender. Most include 4 steps:
During an appraisal, a home value expert will visit your property and assign a general value to your home. Mortgage lenders require an appraisal before they can issue a loan because they can’t loan out more money than your home is worth.
An inspection isn’t the same thing as an appraisal. During an inspection, an inspector will take a walk through your home and look for specific problems and things that need to be repaired. Most mortgage companies don’t require you to have an inspection before you buy a home. However, you should still get one so you’re sure that you aren’t walking into a home with thousands of dollars in hidden repairs.
During underwriting, your lender will check your paperwork and ensure that you qualify for your home loan. A lender may verify your credit, assets and employment. Most of the underwriting process takes place behind the scenes on your lender’s side.
4. Attend a Closing Meeting
Once all other steps are completed, your lender will schedule a closing meeting. During closing, you’ll pay your down payment and closing costs and sign your loan paperwork.
How long does closing take? The answer depends on your lender. Some lenders take months to close on a loan and others specialize in fast closings. Let’s take a look at the average time to close with some of Arizona’s most popular lenders.
Find the Right Mortgage for the First Time
A mortgage is a huge, life-changing commitment. It’s important that you take some time to compare all your options before you choose a mortgage loan provider. The right mortgage lender will make buying your first home easier. The wrong one may leave you stressed out and paying thousands of dollars extra in interest. Don’t be afraid to shop around for lenders and interest quotes before you make a decision.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.