Arizona Mortgage Rates

Living in Arizona

Home to some of the country’s most scenic destinations, including Grand Canyon National Park and Monument Valley, Arizona is well-known for its Old West history and strong American Indian heritage. The state is also home to such thriving cities as Phoenix, Tempe, Tucson and Scottsdale. In fact, more than 7 million people call Arizona home.

According to the U.S. Census Bureau, the median home value in Arizona was $193,200 in 2017. However, that value fluctuates greatly depending on location. For instance, the median sales price in 2017 for Tempe, home to Arizona State University, was $259,100, according to the Arizona Department of Housing. But it soared to $419,500 in Scottsdale, which borders Phoenix. At the other end of that scale, the median sales price in the southern-Arizona city of Tombstone was $81,100. Home sales growth is expected to rise by 3.6% in Phoenix in 2019, while home prices are expected to climb 5.6%, according to Realtor.com.

Statewide, Arizona’s population is forecasted to grow for the next 25 years, which could bode well for a strong seller’s market. How well those homes sell will, again, depend on location. For instance, in Maricopa County, where Scottsdale and Phoenix are located, homes remained on the market for an average of 45 days (from listing to accepted offer) in May, the latest month for which data was available. In Southern Arizona, which includes Tucson, homes spent an average of 38 days on the market in June. Although slightly higher than the national average of 36 days (from listing to accepted offer), per the National Association of Realtors, this indicates a strong sellers’ market.

The rules and costs of buying a home in Arizona

To ensure your home purchase is legal, it’s important to follow all rules and laws implemented at the national and state level. These should be discussed with your real estate agent and, possibly, a real estate attorney before the completion of any transaction.

Home seller and buyer laws

Real estate property disclosure forms: According to Arizona law, sellers must disclose important facts about the property even if the buyer or real estate agent never asks. The Arizona Association of REALTORS offers a seven-page “Residential Seller’s Property Disclosure Statement” to aid sellers. It addresses such topics as association fees, assessments on the property, roof condition, foundation condition, wood infestation, heating and cooling systems, plumbing, swimming pool, electrical system, home improvements and/or maintenance, and environmental issues. Disclosure of these issues is required even if both the seller and buyer agree no statement will be provided.

When purchasing a home built before 1978, the buyer should also receive a “Disclosure of Information on Lead-Based Paint & Lead-Based Paint Hazards (Sales)” form, which is available through the Arizona Association of REALTORS.

Judicial or non-judicial foreclosure state: Arizona utilizes both judicial and non-judicial courses of action to address foreclosures. For non-judicial foreclosures, also called trustee sales, the lender repossesses the home and sells it off to pay the loan. In a judicial foreclosure, the lender files a lawsuit against the borrower to foreclose on the home. It is up to the lender to choose which method to pursue.

As Arizona is a community property state, the law dictates that all property acquired during a marriage belongs equally to the husband and wife and will be split 50/50 in the event of divorce. Exceptions can be made for property that was acquired by gift or inheritance or after filing for divorce.

Arizona doesn’t require an attorney to be present when you close on your home. Instead, as an escrow state, an escrow office will handle the documents and closing process. In addition, a title officer will research the property to ensure there are no liens or other ownership issues related to the property.

Taxes

Summary of real estate transfer taxes: Arizona does not impose any real estate transfer taxes.

Property tax exemptions: In Arizona, each individual county determines its own exemptions for property taxes. For instance, in Maricopa County, which includes Phoenix and Scottsdale, widows and widowers and totally disabled persons age 17 or older may receive a property tax exemption provided they meet certain income and other requirements. Check with your local county tax assessor to determine if you are eligible for property tax exemptions.

Typical property taxes: Arizona property taxes vary based on location, but the median is $1,356 per year on a home valued at $187,700, according to Tax-Rates.org. On average, Arizona counties charge 0.72% of the property’s assessed fair market value. The state’s highest property tax is found in Pima County (Tucson), which collects an average of $1,614 per year. In contrast, Greenlee County, which borders New Mexico, collects an average of just $303 annually.

Conforming loan limits

In Arizona, the conforming loan limit for mortgages on one-unit dwellings is $484,350 across the state. This limit applies to mortgages acquired by government-sponsored enterprises Fannie Mae and Freddie Mac. Each year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limits.

Programs for homebuyers in Arizona

Arizona offers a number of homebuying programs, including down payment assistance and help covering closing costs, as well as assistance for homeowners in danger of losing their homes.

Home+Plus loan

Through this program, renters looking to purchase a home can receive a 30-year, fixed-rate mortgage along with down payment assistance of up to 5%, which can be applied to the down payment, closing costs or both. The down payment assistance is provided in the form of a second mortgage, with two possible sets of terms available. The first is a three-year, no interest, no payment, deferred second mortgage, which is forgiven at a rate of 1/36 over the term of the second mortgage. The second option is a life-of-loan second mortgage with no interest, no payments and no forgiveness. This program is available only to borrowers with a Home+Plus mortgage.

To qualify, the property can be a new or existing single-family home, townhome, condominium, manufactured home or two-unit property. The borrower’s income cannot exceed $105,291 for most loans within the program, and he or she must complete a homebuyer education course. The borrower must also meet the required minimum credit score of 640. (Some loan types require higher scores.)

Learn more.

Pathway to Purchase down payment assistance

Available to homebuyers in 12 Arizona cities with one of 26 specific zip codes, this program provides a 30-year, fixed-rate Freddie Mac HFA Advantage mortgage with down payment assistance in the form of a second mortgage. This second mortgage is equal to 10% of the purchase price up to $20,000 and works as a five-year forgivable lien without any interest or required monthly payments.

To qualify, the borrower’s maximum income must not exceed $92,984, and he or she must complete a homebuyer education course. Applicable only to existing, previously occupied properties, the property must be the borrower’s primary residence with a purchase price of no more than $371,936.

Learn more.

Save Our Home AZ

In an effort to help residents facing foreclosure keep their homes, this program provides assistance through such means as principal reduction, unemployment/underemployment mortgage assistance, reinstatement of delinquent payments and elimination of second liens.

To qualify, the homeowner must prove an income loss of 10% or more, prove imminent default or be two payments in arrears, and/or be no less than 30 days from a trustee sale date. In addition, the mortgage payment must be more than 31% of the borrower’s gross income, and the mortgage amount must be less than $500,000.

Learn more.

Rate shopping tips

When it comes to obtaining the best interest rate for your mortgage, it’s important to be prepared when talking with lenders. Here are a few tips to keep in mind when you are shopping for a loan.

First, talk to at least three lenders on the same day. Because rates fluctuate often, talking with lenders on the same day ensures a fair comparison between interest rate offers.

Second, give each lender the same information in order to have comparable loan estimates. Most lenders expect to see two months of paystubs, two or three months of bank statements and three years of tax returns.

Third, confirm that all individual fees on the loan estimate equal the total amount of costs listed.

Fourth, be prepared to lock in the rate. The rate you are quoted today may not be the same tomorrow. So you may want to consider locking in your rate to ensure the one you want is available when you’re ready to close. The lock will come with an expiration date, which can range from 15 to 60 days ahead, although you may be able to file for an extension, sometimes for a fee. If the rate decreases after you lock it in, ask your lender about the “float down” option.

The information in this article is accurate as of the date of publishing.