Arizona Mortgages & Home Loans
Mortgage Loans
Streamline the process by knowing how much home you can afford before you shop.
Mortgage FAQs
The amount that you can borrow will be based upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special programs for first time buyers including down payment assistance to purchase a home with a higher value. Please contact us, and we can help you determine exactly how much you can afford. You can also get your estimated monthly payments using our financial calculator.
The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
- Earnest Money: The deposit that is supplied when you make an offer on the house
- Down Payment: A percentage of the cost of the home that is due at settlement
- Closing Costs: Costs associated with processing paperwork to purchase or refinance a house, unless the contract negotiates the seller to pay for these costs
Mortgage loan programs do not allow the seller to pay for your down payment. However, the down payment can be a gift from a relative. Most loan programs permit the seller to pay a percentage of your closing and escrow costs (the seller is not required to pay anything toward your costs).
The total seller assist limit is based on the type of mortgage and the down payment percentage. However, the rules allow the seller to pay a percentage of the buyer’s closing costs if agreed to by the sales contract. Each mortgage “type” has their own seller assist guidelines. Talk to one of our mortgage loan officers for more information.
Your loan is eligible to lock in the interest rate once the offer is accepted on your home and the appraisal is complete. Locking in a rate on a home that you are not sure will qualify for financing is not advisable. Once your appraisal comes back, it will give both your processor and underwriter a better glimpse of the eligibility.
Normally, Pre-Qualifying is the fastest way to find out what price range your agent should be searching for. It will save both you and your agent time. A mortgage loan officer will base the Pre-Qualification off the verbal information or initial application, which does not require proof of income up front.
Pre-Approval is another option. Depending on who you ask, they will say that it’s either a must or not that important. The reason for this is that your Pre-Qualification form, which used to be called an “LSR,” has sections that will be checked off depending on how much information you have provided to your mortgage loan officer. So having your Pre-Qualification form in-hand should be more than sufficient proof for your agent and sellers that you have been qualified for a mortgage loan.
Your Pre-Qualification is valid for 90 days. At that point, your mortgage loan officer will contact you for permission to refresh your credit report. It is a simple process and will extend your Pre-Qualification for another 90 days.
With a fixed rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable rate mortgage (ARM), the interest changes periodically, typically in relation to an index it is associated with. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. We can help you evaluate your choices and help you make the most appropriate decision. You can also use our financial calculator.
For most homeowners, the monthly mortgage payments include three separate parts:
- Principal: Repayment on the amount borrowed
- Interest: Payment to the lender for the amount borrowed
- Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like the homeowner’s insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
Understand your personal payment with our Mortgage Payment Calculator.
PMI is required by the lender in the event the loan-to-value ratio is greater than 80%, which is considered a high-risk scenario. That means less than 20% down payment on a purchase or less than 20% equity on refinance transactions. Mortgage insurance protects the lender in case the borrower defaults on the mortgage, while benefiting the borrower by allowing very little down payment or equity. Mortgage insurance, associated with the loan, should not be confused with homeowner’s insurance, which protects the borrower’s house in cases of fire and natural disasters.
Annual Percentage Rate (APR) reflects the yearly cost of a loan, including the interest, mortgage insurance and lender and third-party fees. APR is expressed as a percentage and it involves a complicated mathematical calculation. Always higher than the nominal rate (used to calculate your payment), APR serves as informational or comparative purposes and it can be found on the Loan Estimate and Closing Disclosure.
An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
If you have sufficient equity, we can roll in all of your closing costs and pre-paids into your new loan.
There are several reasons you may want to consider refinancing, including take out a loan against the equity in your home, to lower your interest rate, extend or shorten your term, or to remove a borrower from the loan.
Your Real Estate agent will ask for “earnest money” or an “earnest deposit” from you when your offer is accepted. This is a good faith deposit that will be applied to the amount you will need to bring to closing. The amount you will need to bring to closing will consist of down payment and closing costs.
Some programs require a minimum credit score but there are programs that consider situations such as hardships as an explanation. Talk to one of our mortgage loan officers for further information.
When a lender offers a no down payment mortgage loan, they are financing 100% of the purchase price for your new home. Often a lender will offer this in the form of two loans also called an 80/20 loan. The first loan is normally for 80% of the purchase price and the second loan is normally for 20% of the purchase price. This will provide 100% financing for the total purchase price. This does not include costs. The seller can pay the closing costs if they are negotiated into the contract or the buyer can pay the closing costs out of pocket.
There are a number of costs and factors associated with mortgages, whether they’re zero down mortgages or more traditional. Our 80/20 mortgage program allows you to get into your dream home with just closing costs as mentioned above.
Those looking for a zero down payment mortgage should assess their creditworthiness and how much they are able to borrow.
The main difference between FHA loans and conventional loans is who they are insured by. FHA loans are insured by the government, meaning there’s a lower risk for the lender that means they may be more likely to loan to you. For consumers, an FHA loan provides lower down payment requirements and easier qualification.
Conventional loans can be insured, but to do so they go through a private third party, that’s why conventional borrowers sometimes pay private mortgage insurance or PMI. For FHA loans, homebuyers pay FHA mortgage insurance. For PMI, those insurance payments can go away when you gain significant equity in your home, usually 20%. For FHA borrowers who pay less than 10% on a down payment, the only way to remove the mortgage insurance is to refinance.
A jumbo loan or jumbo mortgage is a loan for properties that are more expensive than a conventional mortgage loan. Conventional loans can only go up to $726,200, according to the Federal Housing Finance Agency. If you’re looking at a property that needs a larger loan, you may need to apply for a jumbo loan. Those looking for a jumbo loan may need to meet stricter standards of creditworthiness.
The jumbo loan threshold in Arizona is $766,550 for a single-family unit, meaning any property that needs more than that amount in a mortgage loan will need to go through the stringent qualifying process for a jumbo loan.
Manufactured, or so-called “mobile homes,” are great options for homeowners. Despite the name, mobile homes are not actually mobile. You’ll want to place a mobile home in a manufactured home development or on land you already own. The manufactured home must be permanently affixed to real property owned by you, cannot have been moved after the initial installation and must have been built after 1976. If you decide a manufactured home is right for you, you may find:
- The cost of purchase may be less than purchasing a traditional stick-built home.
- Down payment requirements may be smaller than a conventional loan
To qualify for a mobile home loan, you need to meet manufactured home financing requirements in addition to proving that you are creditworthy. Creditworthiness is based on a number of factors including credit history, credit score, down payment or land equity and debt-to-income ratio. A mobile home lender will want to see that you have enough income to afford the loan.
A VA home loan is a mortgage that requires $0 down payment. The loan is backed, or guaranteed, by the U.S. Department of Veterans Affairs. The government is not actually extending the loan, but the backing makes lenders more at ease when it comes to offering a loan. A VA home loan can be used to purchase a primary residence or to refinance a home for qualified borrowers.
VA home loans are for:
- Active duty military members or honorably discharged veterans
- Those with at least 90 consecutive days of active service during wartime or at least 181 consecutive days of active service during peacetime
- Those with more than six years of service in the National Guard or Selective Reserve
- Some surviving spouses of a Veteran or spouses of a Veteran who’s missing in action or being held as a prisoner of war For full eligibility requirements check the Department of Veterans Affairs website.
VA loans are not a one-time benefit. Eligible borrowers can use the VA entitlement more than once, depending on factors such as home value and equity. It’s even possible to have more than one VA loan at the same time.
Please see more information on the Department of Veterans Affairs website.
A USDA Home Loan, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a low-interest, zero-down mortgage for rural and suburban homebuyers. However, these loans do have income and other restrictions to qualify.
Some qualifications for a USDA Home Loan include:
- Buyers looking for a primary residence
- A monthly payment — including principal, interest, insurance and taxes — that’s 29% or less of your monthly income.
- Total debt-to-income ratio of less than 41%
A conventional mortgage is a home loan that is not guaranteed by any federal or state agency like the Federal Housing Administration (FHA) or Veterans Affairs Department (VA). Many borrowers will take advantage of a conventional loan. Conventional mortgages can have better interest rates than non-conventional mortgages. It is possible to get a conventional loan with a smaller down payment.
