Tips for Getting Preapproved for a Home Purchase

Tips for getting preapproved for a home loanBefore you can make an offer on a new home, and sometimes, before a realtor will even take you to see a new home, you must have a preapproval letter from a qualified lender. Getting preapproved means preparation and an understanding of what lenders are looking for. Here are some tips to help you along the way!
What Is a Home Loan Preapproval Letter?
A mortgage pre-qualification or preapproval is an estimate of how much home you can afford based on an estimate of how much a lender is willing to give you. It’s important to remember that a preapproval is not always 100 percent accurate. For example, if you get preapproved for $300,000, the bank may end up only giving you $279,000 as more granular details about your financial situation are uncovered. However, a preapproval is important because it will allow you to start looking at homes in your price range – or at least within the ballpark.
What Goes Into a Home Loan Preapproval?
While the preapproval process is not as comprehensive as the loan underwriting process, it will take into account numerous different factors. Some things that a mortgage lender will likely consider before pre-qualifying you include:
  • Proof of income – Understandably so, your lender will want some sort of proof of income, such as W2s, tax statements, or pay stubs.
  • Knowledge of existing debts – You’ll also need to provide your lender with any information about existing debts that you have, including car payments, credit card debt, student loan debt, existing mortgages, and other financial obligations that you might have.
  • Your credit score – Your credit score can affect the amount of money you are able to borrow, as well as the rate you’re offered. The higher your credit score, the better your chances are of being approved with a favorable interest rate. Start working on improving your credit score now. It takes persistence and patience, but you can do it!
In addition to the above, you’ll also need to provide personal information, such as your date of birth and Social Security number. Have this type of information ready when the time comes to get preapproved.
Tips for Getting Preapproved for a Home Loan
You don’t just want to get preapproved for a mortgage loan; you want to get preapproved for a specific amount that is reflective of the value of the home that you want. This may mean spending time – months and even years preparing your finances for preapproval. Some tips to improve your chances of preapproval include:
  • Avoid making any large financial purchases or changes in the months preceding your home purchase (if you can help it).
  • Get your financial documents in order – be prepared to present at least two years’ worth of tax documents. This can take anywhere from a couple of hours to several days to gather, so this is something you can get done well ahead of time.
  • Ask your preferred lender for more information – the preapproval process can be a little complex, so don’t be afraid to ask for more information and counsel. Feel free to reach out to us if you have questions!
Finding the Perfect New Home for You
If you’re looking for a new home in the Northwest, not only do we have brand new homes for sale in Washington, Oregon, and Idaho, but we work with a preferred lender that can help you out. Contact us today to learn how we can help get you into your dream home.

15-Year vs. 30-Year Mortgages – What’s the Difference?

15-Year vs. 30-Year MortgagesBuying a new home provokes all kinds of questions, many of which pertain to financing. Questions like: Which mortgage lender should I seek financing from? How much will be expected to put towards a down payment? What interest rates will I be able to qualify for? How long should I pay off my mortgage? Truth is, all of these questions can have more than one right answer, so don’t stress yourself out too much.

At Hayden Homes, we want to make sure that you secure the financing option that’s right for you and your situation. In addition to talking to a lender, to help you make a good decision, consider these basic differences between 15 and 30-year mortgages.

Mortgage Term Length: What You Need to Know

The 30-year mortgage is the most standard mortgage type throughout the country. Via this model, homeowners make payments on their mortgage loan over the course of 30 years. Because payments are spread out over a 30-year term period, the monthly amount owed on the loan is significantly less than it would be for a 15-year mortgage. However, because the loan extends for twice the length of a 15-year mortgage, the amount of interest paid on the loan is understandably more – and that’s the trade off.

For example, consider a homeowner who purchases a $300,000 home, putting $60,000 (20 percent) down and taking out a mortgage loan for $240,000. With an interest rate of 5%, and factoring in an average value for homeowners’ insurance and property taxes, the homeowner can expect to pay approximately $1,663 in mortgage payments, per month, for 30 years. Over the course of the loan’s life, the amount of interest accrued and paid would be approximately $223,813. To play with some of these numbers, view our mortgage calculator.

On the other hand, if the homeowner decides to do a 15-year mortgage instead, their monthly payments would jump up to approximately $2,272. However, while monthly payments are more, over the course of the loan’s life, the homeowner will pay approximately $101,622 in interest.

So Which Home Loan Length is Right for You?

While the 15-year mortgage may seem ideal on the surface – obviously, any homeowner wants to minimize the amount of money they owe over time – there are some drawbacks, too. First of all, it is harder to get approved for the 15-year mortgage; lenders want to see that homeowners can safely afford higher monthly payments, and that the payments won’t be too large of a portion of homeowners’ monthly earnings. Further, while paying more on your home now may save money over time, it can put a financial burden on your family now. Higher monthly payments may create unwanted financial pressure.

In short, if you can afford the payments associated with a shorter mortgage term comfortably, this may be the best option for you. If you can’t, then a 30-year mortgage is still a great option, and the option that the majority of homeowners in America choose. Keep in mind that you can always refinance at a later date, if doing so makes sense. Also, keep in mind that you can always elect to pay more of your mortgage when the funds are there. This requires more discipline since putting “extra” down each month on your mortgage principal isn’t required.

Come See Our Brand New Homes Today

If you’re looking to buy a brand new home in the Northwest, or if you just have questions, we can help. We have convenient financing options available via preferred lenders, making getting into your new home straightforward. Contact Hayden Homes today to learn more.

Note – While Hayden Homes has been building new homes for 30 years, we are not experts on home loans. In order to truly understand and find out which home loan is right for you, we recommend talking to a lender. The numbers in this article are an estimate and may not reflect the exact amount that you would pay for principle, interest, or monthly payments. Please consult your lending officer for any lending needs and additional questions regarding getting approved for a loan to buy a new home. 

Tips for Financing a Second Home

For many, the idea of buying a second home or a vacation home is a dream – who wouldn’t want to have a home in both of their favorite locations? But purchasing a second home can raise all sorts of questions especially when it comes to financing that purchase. If you’re thinking about buying a second home as an investment property or vacation home, here are some tips for financing a second home as well as the pros and cons of second-home ownership.
Pros and Cons of Buying a Second Home
Pros and Cons of Buying a Second Home
There are myriad benefits of buying a second home, as well as some drawbacks so pay attention as we dive into both the advantages and disadvantages of second-home ownership.
  • Convenience and vacation. Of course, the most obvious reason to own a second home is that you can have a place to stay in a location that you love. This provides for the perfect spot to vacation, or convenience when you’re traveling back to your own neck of the woods.
  • Rental income. If you are able to rent your home for more than your mortgage, you can collect rental income.
  • Increase in property value. Long-term profits are one of the things to think about when purchasing a second home. Assuming that the home appreciates in value, buying a second home can be a great investment.
Of course, there are some downsides to purchasing a vacation home, too. These include, but are not limited to, the financial stress of finding a renter, making payments, etc., arranging home maintenance and cleaning, and high taxes.
Tips-for-Financing-a-Second-HomeTips for Financing a Second Home
If you decided that the ownership of a second home is the right move for you, the next step is understanding your financing options. Some options for buying a second home include:
  • Paying in cash – of course, this option won’t be applicable to everyone;
  • Taking out a home equity loan – if you have a lot of equity in your current home, taking out a home equity loan to finance your new home may be an option; and
  • Conventional loan – if you have the finances to make mortgage payments on two homes, you may be able to qualify for a conventional loan to finance your vacation home. Because second-home buyers are not allowed to use FHA-insured loans (which require a down payment of just 3.5 percent), keep in mind that you may be responsible for the full 20-percent-of-purchase -price down payment.
 Thinking of buying a Hayden Home as an Investment
Thinking About a Brand New Home for your Second Home?
If you are thinking about a new home as an investment property or vacation home, Hayden Homes can help. We have brand new homes for sale throughout the Northwest, including Washington, Oregon, and Idaho. Our homes are brand new, beautiful and backed by our warranty.
Working with Hayden Homes is easy. We offer peace of mind through our new home warranty, and work with local Lenders who can help you figure out the best financing options for your second home purchase. To learn more about buying with Hayden Homes, contact us today to learn more about how we can help!

Mortgage Insurance: What You Should Know in 2018

What Is Mortgage Insurance? When home buyers are approved for a home loan, mortgage insurance may be required. Here’s a summary of what you need to know about mortgage insurance in 2018.

What Is Mortgage Insurance?

As explained by the Consumer Financial Protection Bureau, mortgage insurance (often called PMI or Private Mortgage Insurance) is a type of insurance that is designed to protect your lender. In the event that you fall behind on your mortgage payments, your mortgage insurance will kick in, ensuring that the lender receives the payments they’re owed.

When Is Mortgage Insurance Required?

Mortgage lenders want to make sure that when they’re lending out tens and hundreds of thousands of dollars borrowers are going to repay that money. If the bank questions your ability to repay your loan in the slightest (i.e. you do not make a big enough down payment (20 percent), you have average credit score or limited credit history, etc.) then you may be required to carry mortgage insurance. Mortgage insurance is also more common for certain loan types; FHA loans and USDA loans typically require mortgage insurance. In some cases, private mortgage insurance may help you to qualify for a loan for which you would otherwise be denied.

Paying for Private Mortgage Insurance

In most cases, you will not pay a lump sum amount for mortgage insurance; rather, the payments will be included monthly with your regular monthly mortgage dues.

According to Freddie Mac, the cost of your PMI depends on your loan-to-value ratio (the amount of money that you owe on your house vs. the amount that your home is worth) and your credit score. In most cases, a typical borrower will pay between $30 and $70 per month for every $100,000 borrowed. So if you borrow $200,000, the $30-$70 amount will double.

Should I Move Forward with Mortgage Insurance?

Whether or not you should get mortgage insurance really depends upon your financial situation. If waiting another five-to-10 years to save up enough for a down payment is the only other alternative, you may want to get a foot in the door with home-buying by choosing PMI. If you’re only a year or two away to your goal down payment and credit score, waiting may save you more money over time. You may also be able to cancel your PMI after a certain amount of time or when refinancing to take advantage of better interest rates. Talk to your lender to learn more about your options.

Financing Options and New Homes for Sale

Are you buying your first home? Thinking about moving to something bigger? Looking to relocate to a great community? We can help. At Hayden Homes, we have homes for sale throughout the Northwest, including in Idaho, Washington, and Oregon. Browse our floor plans here and start building your plan to get into your dream home today!

Homebuyer Purchasing Power [Infographic]

If you’re asking yourself “how do interest rates impact my purchasing power”?  Even a 1% change in interest rates can affect how much your mortgage will be. To help answer this question for you, we’ve put together this simple infographic to show you!

Buyer purchasing power is the driving force behind real estate pricing. Every increase in interest rates drops your purchasing power which is important to keep in mind when looking to purchase now or later. As referenced in the rate sheet, you can see that as interest rates increase, buyer purchasing power will decrease.  If you would like specifics, contact a Community Manager today who can help guide you in the right path to owning your home for a payment you can afford. Find your community of interest, and visit with a Community Manager in Oregon, Washington, or Idaho today to learn more!

 

Home Buyer Purchasing Power

Asking Your Parents for Help with a Down Payment

Buying your first home is not an easy feat, especially if you’ve been scrimping and saving for a down payment and want the best possible mortgage rate. However, there are ways to get around having to come up with a 20 percent down payment, including, in some cases, taking out a higher interest loan in exchange for putting a smaller amount down. For those who don’t have that option, though, or for those who don’t want to be bound to a high-interest loan, there may be an alternative: asking your parents for help with a down payment.

5 Reason why parents help their kids with a down payment

5 Reasons Why Parents Help Children Purchasing a New Home

If you are a millennial or generation Z-er, there are a number of reasons why your parents may be willing to help you out with a down payment to buy your first home, beginning with the fact that the relationship between parent-child for young persons in these generations is much different than it was in previous generations. Often times, parents today offer more support for their children than their own parents did. In addition to providing continued love and support, parents may want to help children purchase a home for several reasons:

  • It’s empowering for the parents;
  • Parents view it as a good investment;
  • Parents view it as an opportunity for children to settle, get married, have children, etc.;
  • Parents don’t want children to move back in with them; and
  • There may be tax benefits for parents.

5 Tips for Asking parents for help with a down payment

5 Tips for Asking Parents for Money for a Mortgage Down Payment

Considering that many parents may be willing to support children in purchasing a home by helping with the down payment, the next question is how to ask for help with a down payment. Some tips for asking include:

  • Do it in person – over-the-phone or video chat asks aren’t appropriate for something this big.
  • Explain the benefits and be precise – explain your exact situation, the benefits you and your parents will derive from helping with the down payment, and exactly how much you need.
  • Have information to back you up, like already being pre-qualified for a loan and working with a lender.
  • Invite your parents to be part of the home-buying process, which may make them more comfortable.
  • Offer to pay back the family loan. Of course, it would be great to get money without having to pay it back, but presenting your plan to pay it back, if that is in the cards, will show a level of responsibility, and let your parents know that you’re not expecting a free gift, but would like the opportunity to do something with their help.

Do you have experience asking your parents to help-out with a home loan and if so, did your parents say yes or no? Tell us about your experience. What worked and what didn’t?

COMMENT BELOW.

Vintage -single Story new home

Still Searching for Your Dream Home?

Did your parents says yes!? Great, we are here to help. Even if your parents say no, don’t think that all your options are off the table and you won’t ever be able to buy your dream home. At Hayden Homes, we have homes for sale in communities throughout the Pacific Northwest, and our preferred lenders offer a variety of financing options depending on your situation.

To learn more about homes for sale in Washington, Oregon, and Idaho, contact us today.

Is Buying a Home Still a Good Investment?

If you’re on the fence about buying a home, one thing that may sway your decision is learning more about whether or not buying a home is still considered to be a good investment and a sound financial move. While there are always varying opinions on this, with some arguing that homebuying is a great investment, and others encouraging people to put their money in the rental market instead, there are a number of great financial benefits associated with buying a home. And depending on your local market, buying a home as an investment makes more sense than renting. Here’s an overview of what you need to know.

Is buying a home a good idea?

The Financial Benefits of Buying

Whether buying your first home or upgrading to your dream home, there are likely to be a number of financial benefits to homeownership and real estate investing. A great article published by Forbes lists seven benefits of homeownership, including:

  • Homeownership allows you to build wealth over time;
  • With homeownership, you’ll build equity every month when you make your mortgage payments;
  • There are a number of tax benefits associated with homeownership, including the ability to deduct mortgage interest and property tax;
  • If you sell your home after two years and make a profit, you’ll be able to take advantage of the capital gains exclusion;
  • A mortgage can act as a type of forced savings – when you pay your mortgage every month, you’re paying your equity, essentially putting money into savings; and
  • When it comes to a long-term loan plan, experts often agree that buying will be cheaper than renting, as the interest that you will pay will eventually be lower than the rent that you would be paying had you not purchased a home.

Is buying a Home a good idea?

Buying a Home Can Be a Particularly Good Investment

Here at Hayden Homes, we have new homes for sale throughout the northwest where the real estate market has been improving over the past several years. Our communities in Washington, Oregon and Idaho regularly appear in major news articles as the fastest growing, may of the best places to live article, and most livable cities in the United States. We carefully select communities that we feel would be great long-term locations for growth and sustainability for our valued customers. Also, when you build with Hayden Homes, you build with quality. Our homes are built to serve you – including improving the value of every-day living and meeting your long-term financial goals.

While there are many benefits to buying a home as listed above, remember that not all of these benefits apply in all cases. For example, if you have a habit of overspending and not being able to make payments on-time, then taking on the commitment of a mortgage could actually do more harm to you than good. Working with a trusted financial institution will help you minimize the risk and maximize the gains of securing a home loan, as they will be able to responsibly guide you through the home loan process and secure a loan that is not only feasible, but to your advantage in the long run. We’re also here to help you as well.

Fernhill-finished-lower-level-great-room

Meet with Our Home Builders Today

If you’ve been renting, or if you’re feeling ready to upgrade homes, then we have great news. Buying a home in 2018 is a good investment. Interest rates are still great, our homes are energy efficient and we pride ourselves in the superior value of our new homes. There are many other benefits to homeowners and we can’t wait to talk more about them in person. Our northwest home builders in Washington, Oregon, and Idaho are standing by, ready to assist you in preparing for and securing a home loan on a brand new home that will help you acquire wealth down the road. We have homes for sale now that we think you’ll love! Contact us today to learn more.

What Is Private Mortgage Insurance and How Do I Avoid Paying it?

When you are buying a new home and asking a lender for a mortgage loan, there are a lot of different documents and financial terms that you will need to review and become familiar with. And depending upon your financial situation, you may be asked to purchase Private Mortgage Insurance (PMI) in order to qualify for your loan. Here’s an overview regarding what you need to know about private mortgage insurance, and how you may be able to avoid paying it:

Buying a new home with Zero down home loan - USDAPrivate Mortgage Insurance – What’s That?

Private mortgage insurance, or PMI, is a type of insurance that protects the lender from losing money if the borrower ends up not making payments on their loan, eventually resulting in foreclosure.

PMI isn’t always required, and there are many homeowners throughout the nation who do not have PMI coverage. However, your lender may require you to purchase PMI if:

  • You are asking for a conventional loan; and
  • You are making a down payment of less than 20 percent.

How-much-does-PMI-costHow Much Does PMI Cost?

How much you have to pay for private mortgage insurance depends upon how much you are borrowing, with Bankrate.com explaining that the average rate is between .3 and 1.5 percent of the original loan amount per year, with a lower percentage being based on a greater down payment amount. ConsumerFinance.gov describes more about the process of making payments, detailing that premiums are typically added to the monthly mortgage payment. It’s important that you review your loan disclosure and closing documents so that you know exactly how much you may be liable for.

How to avoid paying Private Mortgage InsuranceHow to Avoid Paying for Private Mortgage Insurance

There are drawbacks and advantages to PMI. The biggest advantage is that if you agree to purchase PMI, you may be able to qualify for a loan that you otherwise would not be eligible for; the biggest drawback is that you have to pay more every month to insure your loan. It is very important that you discuss your options with your lender before you commit to anything.

It is sometimes possible to secure a conventional loan without PMI even if you don’t put 20 percent down. In exchange, you may be offered the loan at a higher interest rate. There are also other types of loans available that you may consider, such as FHA loans. Read our post on How to Determine which home loan is right for you!

Spacious New Hayden HomesHayden Homes Can help Get you get into Your Dream Home

Being a homebuyer who is looking into buying a new home, even if it’s not your first home, comes with a number of questions. At Hayden Homes, we can help you answer those questions and get into your dream home.  To view our new homes for sale throughout the northwest, including in Washington, Oregon, and Idaho, call our Online Home Concierge today at 541-797-0097, or contact us online.

What Is a Mortgage Credit Certificate and How Can It Help Me as a First-time Homebuyer?

First-Time-homebuyers-using-an-IRA-photoIf you’re thinking about buying a home, or have recently bought a home for the first time, understanding the Mortgage Credit Certificate program could help you to save money when it comes time to pay your taxes, and could even help you to qualify for a loan. Here’s what you need to know about the mortgage credit certificate program and how it may help you as a first-time homebuyer.

Understanding Mortgage Credit Certificate: The Basics

As explained by the National Homebuyers Fund, Inc., a mortgage credit certificate–or MCC–is a tax credit from the Internal Revenue Service (IRS) that reduces how much an individual must pay in federal taxes by subsidizing the monthly mortgage payment. The site further explains that the benefits are twofold: first, the MCC is based on the amount of interest that the homebuyer pays annually, and can also help the buyer to qualify for the loan initially because it increases net earnings and decreases tax liability. Indeed, the reduced tax liability is a dollar-for-dollar amount based on the mortgage interest paid yearly (as a note, there is a cap on the amount of tax liability that can be reduced).

The purpose of an MCC is to help lower-income families afford homeownership for the first time.

State and Local Governments and MCC Programs

An MCC should not be confused with the federal first-time homebuyer credit. Unfortunately, the federal first-time homebuyer credit of $8,000 offered by the IRS has expired, but there are still many state and local governments that offer the MCC for residents. What’s more, the MCC continues year-after-year, so long as you continue living in your home, and continue paying your loan. Here’s how eligibility for the MCC typically works:

  • The candidate must be a first-time homebuyer;
  • The candidate must meet certain income requirements; and
  • The home that is purchased must be eligible (based on location and purchase price limits).

Worried About Qualifying for a Home Loan?

If you are worried about qualifying for a home loan in order to purchase your first home due to a lack of sufficient income, a Mortgage Credit Certificate may help you get approved. This is because many lenders will count the offset of the portion of the mortgage interest as a tax credit, not a tax deduction, bolstering an applicant’s annual income.

How to Find Out More

If you are interested in the MCC program, check in with your state to determine whether or not an MCC is offered where you live.

If you don’t qualify for an MCC, there are a multitude of other programs and financing options that may be available (Read our Blog about different loan options here) if you’re buying your first home in Washington, Oregon, or Idaho. To learn more, reach out to our Hayden Homes team members for questions – we have simple financing options available, and can put you in touch with one of our preferred lenders who can help you get into your dream home as soon as possible! Contact us today to learn more about financing, as well as new homes for sale in your area.

How the 2017 Tax Bill Will Affect Homeowners

how-the-new-tax-bill-will-affect-homeownersIntroduced at the end of 2017, the Tax Cuts and Jobs Act of 2017, commonly referred to as the “tax bill,” saw widespread support and condemnation from both sides of the political aisle. Those in favor of the bill saw it as a necessary piece of legislation that would help spur economic growth, and increase in jobs and investments. On the other side, critics saw it as an attempt to unravel social safety programs.

Political stance aside, however, there is one cohort who is wondering how this new law will affect them: those interested in buying a new home. As a December 2017 article in Curbed explains, there are a number of considerations that prospective homeowners should keep in mind as we move forward into the new year.

First-Time-homebuyers-using-an-IRA-photoHow Prospective Homeowners May Be Affected by the Tax Bill

Of course, the 2017 tax bill won’t only affect prospective homebuyers throughout the country. Rather, the bill includes myriad provisions that ultimately affect every single American. But, one of the ways the tax bill will affect prospective homeowners is by capping the mortgage interest rate deduction at $750,000 (down $250,000 from what it was previously). This means that new homebuyers will be able to deduct interest on the first $750,000 of their mortgage debt, as opposed to the first million. This new change would apply to both first and second home purchases.

But will this new cap in deductions affect all prospective homebuyers? Definitely not. The median home price nationwide is currently about $254,000. So unless you are shopping for homes in San Francisco or another expensive market, the new deduction limit shouldn’t be a problem generally speaking.

Hayden Homes is proud to offer some of the most elegant, modern and exciting new homes in the Pacific Northwest where the housing market is booming and the cost of living is great. Take Idaho for example. The cost of living in Idaho is far more favorable than it is in California. Consumer prices, restaurant prices and grocery prices are all between 18-59% lower in Boise, ID than in Los Angeles, CA. And while Idaho may not offer ocean views and palm trees, there’s a plethora of glistening rivers and lakes, mountain views, outdoor recreational opportunities. That’s enough reason to start packing your bags today!

Are You Searching for a Home? 

If you’re looking to maximize your dollars in a new home, consider one of the many brand new, never been lived in before, homes in the Pacific Northwest by Hayden Homes. Searching for your dream home starts right here. Don’t hesitate to reach out to our committed Community Managers today. We offer affordable, attractive and top-quality homes for sale in Idaho, Oregon, and Washington, and they can’t wait to help you find the best option for you, for whatever stage in life.