With more than 7,453,517 people currently residing in Arizona, the housing market is on the up and up. But the heat in the area isn't the only thing that's high; the mortgage rates are also rising.
If you're considering buying a home in the area, you'll want to take some time to learn about the mortgage rates in Arizona. Continue reading below to learn about some of the latest trends we're seeing that will help you get one step closer to buying the home of your dreams and securing a mortgage rate that fits your needs and budget.
Why Are Mortgage Rates Higher?
When we take time to look at past mortgage rate trends, they are higher now than they've ever been in the past. There are several reasons this has happened, including a mix of things that potential homeowners can control and others that they can't.
One reason that is within your control is your FICO credit score. If your credit score is low or you have a spotty rental history, it can be a red flag for lenders. Therefore, to ensure you'll pay your loan back, they might give you a higher interest rate than if your credit score was on the higher end.
Another thing that could affect your mortgage rate is the debt you owe and the amount you put down for the property you want to buy. While there are some things you can control, there are others you can't, such as inflation.
Inflation can increase mortgages because it lowers the value of money in the economy, which leads to a decrease in demand while increasing mortgage rates.
More People Are Refinancing
As you're going through the home-buying process, another trend you might notice is that many Arizona homeowners are looking to refinance their mortgages. This is because, for many, the pandemic aided in increasing the equity of their homes.
Therefore, the best way to gain access to this additional equity would be to refinance the home. This is called cash-out refinancing and carries its own set of rules and regulations that homeowners must follow if they want to refinance.
Choose Your Options Carefully
It's understood you should take your time to shop around for a mortgage you can afford. There are a few different types in Arizona that you might consider, including a conventional mortgage.
If you want to qualify for this type of loan, you have to be prepared to put down at least twenty percent towards the down payment and have a strong handle on your outstanding debts. Another loan type is the FHA loan.
This can be used if you have a less-than-favorable credit history. The Federal Housing Administration will give this loan, and lastly, if you're a veteran, you can use a VA loan.
Mortgage Rates: Trends to Know
Regarding mortgage rates and various trends in Arizona, we've listed a few above. One trend is that many homeowners are refinancing their properties, and your mortgage rate can be affected by several factors.
Are you looking to buy a property? Or perhaps you want to sell yours? Contact Prescott Property Management for a free rental analysis now.