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Buying Your Tucson Home
Buying Your Tucson Home 

        Agency... What is it?  It's your relationship with your Realtor®
        When you buy or sell a home, you enter into a relationship of trust, representation, and confidentiality with your Realtor®. "Agency" refers to the type of relationship you may establish with your Realtor®, and it is grounded to the fiduciary responsibility of the agent to the client. It is in your best interests to establish your agency relationship with your Realtor® at the very beginning.

        Although you are working with a real estate agent, he or she does not work on your behalf as your legal agent until you give him or her the authorization to act on your behalf. This relationship may be established through either an oral or written agreement to have the agent act as your representative.

        Once you have agreed to have the Realtor® act on your behalf, you become the principal or client in the transaction, and as such, you have the right to expect and receive the fiduciary duties of confidentiality, loyalty, faithfulness, full disclosure, obedience, reasonable care and diligence, and accounting.

        There are different types of agency. A listing broker works as an exclusive agent for the seller, providing assistance and counseling to help the seller get the best price for the seller´s property. A buyer´s agent works as an exclusive agent of the buyer, representing the buyer´s best interest in the transaction, locating suitable properties, and providing advice on market value. In each case, the Realtor® has a fiduciary responsibility to his or her client. The only difference is that one client is a seller, and the other is a buyer.

        A dual agent functions as a representative for both the buyer and the seller at the same time, in the transaction. The agent, in this case, has the responsibility to remain neutral in the transaction, and must respect the confidentiality of information both from the seller and from the buyer. This is a legal agency relationship, provided the situation is disclosed to both parties, and both parties consent to the arrangement.    

        Here are a sample Agency Disclosure Statement, and sample Buyer Broker Agreement provided by the Arizona Association of Realtors.

        Top

         

        How Your Property Tax is Figured
        Few homeowners have any idea how the property taxes on their homes are computed. It´s a confusing process but one that directly affects your pocketbook. In Arizona, there are actually two separate but similar real estate taxes. Both are based on a property value for tax purposes multiplied by the assessment ratio and then by the tax rate.

        Primary Rate
        The first tax uses what is called a "limited property value" or LPV. The limited value, created by state tax reform in the early 1980´s, is the property value in 1980 plus annual increases limited by law. As a result, the LPV may be significantly less than the home´s current value.
        The "primary tax rate" is applied with the limited value. This tax rate is a total of those determined by the governing boards of the state, county, city, school district and special districts. It pays for their operating budgets.

        Secondary Rate
        The second tax is based on the "fair market value," a tag that confuses many homeowners. Fair market value for tax purposes is NOT the current value of the home, but rather an average of what similar houses have sold for during the last three years. During the fast growth years of the past, the FCV often ran about 80 per cent of the current value. As a result some people have thought the full cash value is computed by taking 80 per cent of the current market value, but that is not true. The "secondary tax rate" which is used with the full cash value, pays for long term bonds and is established by the voters when they approve bond issue.

        Assessment Ratio
        The assessment ratio is a percentage set by law for how the property is used. For owner occupied and residential rental homes, the assessment ratio is 10 per cent. It is 16 per cent for vacant land (includes farm land), and 25 per cent for commercial property. In effect, the assessment ratio provides a tax break for homes and residential rentals compared to vacant land and commercial properties by creating a lower "assessed valuation." The chore of compiling all the property values and computing the taxes falls to the county assessor.

        Paying the Piper
        In Arizona, property taxes may be paid in two payments. Taxes for the first half of the year are due October 1 and for the second half are due March 1 of the next year.
        The dates homeowners usually watch, however, are November 1 and May 1 - the delinquent dates, after which penalties and interest are charged if the taxes have not been paid.

        For more information,
        click here to go to the Pima County Assessor's Page     Top

        Title and Escrow
        An escrow is an independent third party account and is the means by which the interests of all parties to a transaction are protected. The escrow is created after the contract for the sale of the home is executed. The escrow becomes the depository for monies, documents and instructions that pertain to the sale of a home. Title insurance is a contract of indemnity that guarantees against the defects in title. Click here for more information on title and escrow.    Top

        Financing Your Home
        Get pre-approved - You will have a stronger negotiating position when making an offer on a home, because the Seller will know you can perform. In addition, you will know exactly how much you are qualified for, what your closing costs and monthly payment will be, and determine which loan program best fits your needs. Types of loans:

        The Fixed Rate Mortgage -is a traditional method of financing a home. The interest rate stays the same for the entire term of the loan - usually 15 or 30 years - so the interest and principal portions of your monthly payment remain the same. Your payments are stable and predictable, but initial interest rates tend to be higher on a fixed-rate mortgage than on adjustable-rate loans. Many fixed-rate mortgages cannot be assumed by a subsequent buyer.

        The Adjustable Rate Mortgage (ARM)The interest on an adjustable-rate mortgage is linked to a financial index, such as a Treasury security, so your monthly payments can vary up or down, over the life of the loan - usually 25 to 30 years. Some adjustable-rate mortgages have a cap on the interest rate increase, to protect the borrower. The lower initial payments on ARMs make it easier for buyers to qualify. Some ARMs may be converted to fixed-rate mortgages at specified times. The following are some of the Adjustable Rate Mortgage terms:

        Adjustment Period:
        The length of time between interest rate changes on an ARM. For example, a loan with an adjustment period of one year is called a one-year Arm, which means that the interest rate can change once a year. There are loans that may be a fixed rate for the first five or seven years, and then begin to adjust every year.

        Annual Percentage Rate (APR):
        The total finance charge (interest, loan fees, points)expressed as a percentage of the loan amount.

        Cap:
        The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.

        Index: A measure of interest rate changes used to determine changes in an ARM´s interest rate over the term of the loan.

        Margin:
        The number of percentage points a lender adds to the index rate to calculate the ARM interest rate at each adjustment.

        Financing FAQ's - Financing Tools - Get Pre-Qualified - Top

        Home Inspections and Due Diligence
        The purpose of the home inspection is to give your home, and all of its essential systems and components, an on site examination, before you make your final purchase decision. The inspection usually takes two to three hours, and will include the roof, the exterior and interior components of the structure, the foundation, heating, air conditioning, plumbing and electrical systems. You are encouraged to join your Home Inspector, as this will be the perfect opportunity for you to learn about the workings of your home, and how to maintain them. Please ask us for a list of recommended Home Inspectors.

        Information you will receive about a house from the Seller will include what is on this sample Seller Property Disclosure Statement. In addition, the Arizona Department of Real Estate has issued aBuyer Advisory. Here are a few more links that may be helpful to you:

        Pima County Assessor
        Tucson Police Dept. Crime Statistics
        Pima County Crime Statistics                  Top

        Additional Information for Buying Your Home

        Moving into Your Tucson Home - many links available for all that you need to do to get settled in your new home

        Moving Checklist - this will help you get and stay organized for a smooth move!

        Sample Residential Sales Contract
        Tips for Buyers

        Glossary       Top

        Frequently Asked Questions about Financing
        Q: How long does it take to process a loan application?
        A: Usually about 45 to 60 days, although it can take as few as 30 days and as long as 90 days for some transactions. The actual time depends on how quickly the lender can get an appraisal of the property, a credit report and verification of employment and bank accounts.

        Q: What documents will I have to provide?
        A: Be prepared to provide verification of income (including) a pay stub and recent tax returns), bank account numbers and details on your long-term debt (credit cards, auto loans, child support, etc.). If you´re self-employed you may also be required to provide financial statements for your business.  In recent years, lenders have been required to obtain more specific information from borrowers in order to package and sell loans to investors. If you were lending someone such a large amount of money, you´d want detailed financial information.

        Q: Could anything delay the approval of my loan? 
        A: If you provide the lender with complete, accurate information, everything should go smoothly. You may face a delay if the lender discovers credit problems-a history of late payments or nonpayment of debts, or a tax lien. You may then be required to submit additional written explanations or clarifications. You should also be sure to notify your lender if your personal or financial status changes between the time you submit an application and the time it´s funded. If you change jobs, get an increase (or decrease) in salary, incur additional debt or change your marital status, let the lender know promptly.

        Q: What do closing costs include? 
        A: Closing costs cover the processing and administration of your loan and an appraisal of the home. You´ll usually be asked to also prepay interest charges, to cover the partial month in which you close, and impounds for property taxes, hazard insurance and mortgage insurance.

        Q: When do my payments start?
        A: Usually about 30 days after closing. The actual date of your first payment will be included in your closing document.

        Q: What is included in my payment?
        A: Principal and interest on your loan. Depending on the terms of your loan, the payment also may include hazard insurance, mortgage insurance and property taxes.

        Q: Can I pay insurance and taxes separately?
        A: Not if it´s an FHA-insured or VA loan. With most other loans, you can pay your own taxes and insurance if you borrowed no more than 80 percent of the purchase price or appraised value of your home. Check with your lender to be sure.