Thanks for taking the time out to quickly review the buying process in Arizona.    I also included the mortgage process which is where you start.  

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If you would like to call for a consultation, you can reach me at 480-466-4917 for more details.

Buying process:

1. Pick me as your realtor.  We need commitment to, with so many leads agents get, its hard to know who to give attention to.  Be direct with your agent and tell them exactly what you want, timeline, homes you like and give commitment to your agent to get the most out of them.
2. Loan qualification: Discuss financial resources and obtain pre qualification letter.  More information in detail below. Let me know if you need a pre qualification letter, I’ll set you in the right direction.
3. Home viewing: Realtor sets up a strategic search based on your needs that allows you to find the most ideal home and location. Many trips sometimes are planned but when you see a good one, usually they don’t last.
4. Offer submission:  The realtor makes and negotiates the best offer price and terms based on market conditions.
5. Offer is accepted!  Congrats!!!
6. Escrow is opened: A title company and escrow officer are selected to ensure that there are no glitches in transferring title to the home, and there is a neutral third party managing any monies or documents necessary to close the transaction. Many additional steps of the escrow process are facilitated by the escrow officer to be discussed in a later post.
7. Loan application is submitted: the formal loan approval process is now under way and you will be asked for detailed documents.
8. A home inspection is scheduled as soon as possible, allowing you to find out everything possible about the condition of the home.  We have 10 days to respond, take as much time as you want to see what items you’d like the seller to fix.  This is called the BINSR, its not used to re negotiate, but to get important items fixed before possession.
9. Home appraisal: Lender ordered to insure that the value of the home is equal to or greater than the amount of the home loan.
10. Lender required home owners insurance is secured.
11. Loan approval: Loan documents are sent to the title company and a signing date is arranged.  Title company will reach out to you.
12. Pre-closing walk through to insure that the home is in similar to condition to date of offer, with all agreed upon repairs made.
13. Loan funding: lender sends loan funds to the title company.
14. Transfer/recording of deed.
15. Close of Escrow: You now have keys in hand and can begin your lives in your new home!

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The mortgage process and steps to buying a home in Arizona

For those borrowing to purchase their home, the mortgage process is usually the most stressful and opaque part of the transaction. It’s best to start as early as possible and be ready to produce lots of documentation. The following is the general process in Arizona:

1. A buyer submits a loan application to their lender, either directly or through a mortgage broker. Of course, well before this point, a pre-qualification or pre-approval with a lender should have been acquired.  Basically, email me at jay.bru1@gmail.com and I’ll set you up with a few lenders to choose from and they can have a pre-approval for you the same day possibly!!  That’s good news!
2. The lender sends a “Good Faith Estimate,” or GFE, to the buyer that is a breakdown of estimated closing costs. The final costs are likely to deviate from this estimate.

3. The buyer sends a series of personal financial disclosures to the lender. These vary by situation, but the most commonly requested documents are:

   • Several months of statements for each bank account a borrower holds (including any investment accounts)
   • Several months of statements for any outstanding loans, lines of credit, or other liabilities. This can also include documentation of rent payments.
   • Up to two years of tax returns, released to the lender via an authorization submitted by the buyer using IRS form 4506-T.
   • Recent pay stubs and contact information for each borrower’s employer. The number of pay stubs varies by situation.
   • Any other disclosures that are material to a borrower’s financial situation. This includes but is not limited to marriage licenses, divorce settlements, child support, liens, bankruptcies, or judgments. If there’s something that affects how much money you have on hand that isn’t shown by simply looking at your salary, be prepared to document it.
   • Explanation of any credit inquiries
   • Substantiation of any large deposits or cash gifts that aren’t regular income. In some cases, a large cash gift may look similar to a personal loan by a friend or family member, and lenders will require gift letters from those that gave you the cash gift, stating that the gift was not a loan. They may also ask for itemized deposit slips. The exact amount that triggers this requirement varies by the situation (for instance, a $1,000 cash gift may be material to a single borrower that makes $35,000/yr but may not be material to a borrower that makes $350,000/yr), so it’s good practice to ask your lender if you suspect you might have a material cash gift or large deposit – so you aren’t surprised by this at the last minute.
   • Repeated and updated documentation of any of the above. Keep in mind: to a lender, anything can happen to a borrower’s personal financial situation and credit during the escrow process. Thus, you may be asked more than once for the same type of document so that your lender has the most recent pay stubs, rent receipts, bank statements, or other disclosures that may change over time. Any material changes in these documents -or any element of your personal financial situation- may require the lender to reassess your eligibility for the loan for which you’ve applied.

Continued steps to buying a home in Arizona and the Mortgage process

1. Steps to buying a home in Arizona.  The lender renders an approval decision, and if approved, issues a loan commitment letter, stating its willingness to fund the mortgage provided certain conditions are met. These conditions usually include appraisal (so the lender can confirm that the property you’re buying isn’t worth far less than you’re paying) but will also generally include any material change in your situation -or the property- as initially disclosed to your lender.
2. The loan contingency must be removed by the buyer by a certain number of days before the closing date (or “close of escrow), otherwise known as the loan contingency date. By this date, a buyer must either get a loan commitment or communicate to the seller that they are unable to do so (and walk away from the deal without losing their earnest money).
3. An appraisal is ordered by the lender or mortgage broker via a central directory of appraisers (often called an Appraisal Management Company or AMC). Choosing a specific appraiser is not possible, but an agent or a mortgage broker can reject an appraiser and ask for a new one. If the appraisal comes in lower than the purchase price, a lender can decline to approve the borrower unless a change is made to the purchase price or the size of the downpayment. Most contracts will have an appraisal contingency clause allowing for cancellation (with no penalty) due to issues with an appraisal coming in too low.
4. The lender typically submits a request for title commitment to a title company. The title company then examines the quality of the title and any findings from the property survey that is provided (if none exists, it will have to be performed). If all is well, a title commitment will be prepared that certifies that the title is free and clear, and ready for sale. Title insurance may also be arranged in this step.
5. Homeowners’ insurance is purchased (or substantiated, if the property being purchased includes homeowners’ insurance as part of association fees or similar arrangements), and proof of homeowners’ insurance is submitted to the lender.
6. Hazard insurance may be required by the lender to protect the asset from fire and storms. If the property is located on a flood plain, then flood insurance may be necessary as well.
   Tip: As this process can be long, arduous, seemingly arbitrary, and is often critical to your homebuying transaction, try to prepare these documents (or at least figure out how to prepare them) in advance. Also, do not make any changes to your employment or credit until your transaction is complete (not just until you get a loan commitment letter). This means not switching employers even if it results in a higher income, as counterintuitive as that may sound. It also means not leasing or financing a car, opening a new credit card account, or anything else that can affect your credit report.

Regards,

Jay Bru

480-466-4917

jay@jaybrugroup.com

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