Mortgage Rates Arizona

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    Mortgage Rates Arizona: Home Buying In A Competitive Market

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    With home prices rising in the Grand Canyon State of Arizona in the past few years, it’s best to plan your AZ home purchase sooner than later. Still, it’s always wise to check out the local mortgage and refinance rates before buying a home.

    To ensure you’re getting the best rates, you need to compare loan offers in the state. Don’t worry, this guide will help you find the most affordable option for your housing needs. We’ll also provide insider access to today’s mortgage rates in Arizona!

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    Mortgage Loan Options In Arizona 

    As in most parts of the United States, you have three loan types of home loans to fund your home in Arizona:

    Conventional Loans

    Conventional mortgages are the most common loans offered by many banks, mortgage companies, and other private lenders. These loans are guaranteed by guarantor companies Fannie Mae and Freddie Mac. 

    To qualify for these guarantees, lenders have to conform to loan limits set by the Federal Housing Finance Agency (FHFA). Currently, Arizona has conforming loan limits up to $548,250, on par with the national average.

    Fixed-Rate Mortgage

    Fixed-rate mortgages have a set interest rate that’s locked at the beginning of the loan. You get a constant mortgage rate for the entire life of the loan, as well as a fixed monthly payment amount. Fixed mortgages are usually available in 15-year, 20-year, and 30-year terms. 

    This consistent APR rate and fixed monthly payment amounts make it more predictable and easier to budget for. This is why fixed-rate loans are popular with first-time home buyers and people who plan their finances far ahead. 

    Adjustable-Rate Mortgage (ARM)

    Adjustable-rate mortgages are the opposite of fixed-rate mortgages – your interest rates will adjust based on a market index chosen by the lender. An ARM’s fixed-rate period is denoted in the name. A 5/1 ARM, for instance, has a five-year fixed-rate period, after which the ARM rate will adjust annually.

    This loan type is best taken if you want to take advantage of the initial low-rate fixed-interest period. However, keep in mind that your monthly payment amount may fluctuate when it enters the adjustable phase.

    Government-Backed Loans

    The federal government offers home loans to boost homeownership rates in certain demographics. These loans, each sponsored by a government agency, usually feature lower average interest rates and more relaxed qualification requirements. 

    The three major government loan programs are:

    • Federal Housing Administration (FHA) loan: FHA loans are geared toward lower-income borrowers. They have lower credit requirements, a lower mortgage rate, and a very low down payment requirement.
    • Veterans Affairs (VA) loan: VA loans are designed for current and former military members. This type of mortgage features no down payment and no minimum credit score requirement. However, borrowers must pay funding fees that replace the cost of PMI.
    • United States Department of Agriculture (USDA) loan: This type of loan is intended to stimulate homeownership in rural areas. USDA loans have no down payment requirement and have a low private mortgage insurance (PMI) cost, although you need to purchase a home in an eligible rural are and meet income requirements to qualify.

    Mortgage Refinancing

    In addition to purchase loans, you can also opt for a mortgage refinance. The two types of refinances are:

    • Rate and term refinance: This type of mortgage refinance allows you to change the rate or term of your mortgage loan. You can change a fixed-rate loan to an ARM, as well as lengthen or shorten the mortgage’s term.
    • Cash-out refinance: This refinance helps you leverage your home’s equity. Cash-out refinancing allows you to take a loan larger than your home’s current value. Once you use the loan to pay off your previous mortgage, you can use the leftover money for other things.
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    Current Arizona Mortgage Rates

    Arizona’s average rates have been on par with the national average – if not sometimes slightly higher – since 1997. Here are most current Arizona mortgage and refinance rates today. This data is taken from a survey of the nation’s major lenders; we update it daily.

    Today’s Mortgage Rates in AZ

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    If you’re looking for a custom Arizona mortgage rates estimate, you can use our rate tool at the top of this page. Just input your personal and financial information, and we can provide you with a personalized Arizona mortgage rate estimate!

    First-Time Homebuyer Programs In Arizona 

    Like many other states, Arizona offers programs to increase homeownership rates for first-time home buyers. Through the Arizona Department of Housing (ADOH), the state offers two programs:

    Home Plus Program

    This program offers borrowers a 30-year fixed-rate mortgage with closing cost, origination fees, and down payment assistance. Qualified borrowers can also take advantage of its lower PMI cost.

    To be eligible for this program, the borrow has to fulfill these conditions:

    • Purchased home price cannot exceed set limits.
    • New home must fulfill property use requirements – only primary homes are eligible.
    • Income and credit score must meet set requirements.
    • Borrower must complete a mandatory homebuyer education course.

    Pathway To Purchase Down Payment Assistance Program

    Another alternative homebuyer assistance program is the Pathway to Purchase. This program provides a 30-year mortgage with down payment assistance. To qualify, borrowers: 

    • Must purchase located within a zip code covered by this program
    • Must use the loan to buy a primary home
    • Can only buy pre-existing homes
    • Must complete a homeowner education course
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    Buying A Home In Arizona 

    Navigating the high-demand housing market of Arizona can be a challenge of its own. If you don’t know what to do, someone else might snatch up your dream home before you can make an offer.

    To increase your chances of getting your dream Arizona home, follow these steps:

    Step 1: Evaluate Your Financial State

    Mortgages are a large financial commitment. To make sure you’re ready, you need to take a look at how you’re doing financially. You must ensure that your credit score and debt-to-income ratio fulfill the lender’s standards.

    Aside from the total purchase price, you also have to consider other costs and fees that come with buying a home:

    • Down payment
    • Closing cost and lender fees
    • Homeownership costs
    • Future mortgage payment costs
    • Property taxes

    Talk to a lending officer about your maximum home purchase price inclusive of all charges. While taking out a large loan amount to cover everything can be tempting, remember that you need to commit to it for years to come – make sure your finances can handle it first!

    Step 2: Get A Preapproval

    A preapproval letter demonstrates to sellers that you’re serious and financially prepared to buy the house. You can get this document by applying with a lender for a loan. Be sure to compare quotes from multiple mortgage companies to find the best deal. 

    Step 3: Contact A Real Estate Agent And Start House Hunting

    Good real estate agents are your greatest allies during house hunting. With a local agent who knows the area, you’re more likely to get better deals and find a lower purchase price.

    A good piece of advice when house hunting is to start with the neighborhood, then zero in. Choose a neighborhood that fits your lifestyle and budget, then ask about the average home value and property tax in the area. 

    Also, be sure to choose a property type that’s allowed on your loan – some mortgages only allow pre-existing homes, for example.

    Step 4: Make An Offer

    As soon as you find the right house, it’s time to make an offer! In this competitive housing market, you may need to make compromises to get your dream home – you can either put down a larger deposit or make an offer above the listed home price to beat out other prospective buyers.

    Step 5: Have Your Home Inspected

    After the seller accepts your offer, you have to do your due diligence. Hire appraisers and home inspectors to ensure that you’re getting a house in good condition at the right property value. If you find an issue with the house (or find that you’ve overpaid), you can go back to the seller for a re-negotiation.

    Step 6: Close The Deal

    On closing day, you’re likely to be flooded by paperwork. Be sure to ask your real estate agent any remaining questions before signing on the dotted line. Make sure that you’re prepared to pay for the closing costs and lender fees as well.

    Once everything is done, you can start making moving arrangements.

    How To Get Better Mortgage Rates In Arizona

    Since mortgages are a long-term commitment, getting the best rate is essential. Here’s some advice on how to lower your mortgage rates:

    Improve Your Credit Score

    Low credit scores make you look like a risky borrower. Because of this additional risk, lenders may charge a higher rate once you apply for a loan.

    To improve your credit score, always pay your bills and credit card expenses on time. Regularly checking your credit report and reporting any mistakes can also boost your score.

    Use Discount Points

    Many lenders offer discount points to reduce your rates. Discount points are usually worth 1% of your loan amount and reduce your rates by 0.25% each. For example, if you have a $300,000 mortgage with a 4.50% interest rate and buy 2 points, you’ll pay $6,000 to reduce your interest rate to 4%. 

    Discount points allow you to experience more savings in the longer term. But if you plan to refinance or pay off your loan sooner, discount points will likely cost more than they save. Be sure to calculate the returns first before paying for points.

    Get Shorter Mortgages

    If you have good cash flow, consider getting a shorter loan. Shorter loans often come with lower rates and you’ll pay off your mortgage balance quicker – and build equity faster – compared to longer-term loans.

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    Closing Thoughts 

    Arizona is a competitive housing market, so you may face some competition for your dream home. However, knowing the local mortgage rates and the process of buying a home can put you at an advantage. 

    If you’re looking for the best mortgage to buy your Arizona home, Wesley LLC is ready to assist you. Contact us today for more mortgage resources and advice!

    Written By Ed Wallace
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