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 can help you get into your dream home as soon as possible! Contact us today to learn more about the 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.

Tax Breaks Every First-time Homebuyer Should Know About

Did you know that every year, there are changes made to the tax code? That means that if you are planning to buy a new home in 2017, the tax breaks that apply to you could differ from previous years’ rules, and certainly rules in the future. Here are some tax breaks that every first-time homebuyer should know about.

Tax Benefits for buying a new home - Hayden Homes1. You Can Deduct Your Home Mortgage Interest

One of the biggest perks of being a homeowner is that you can deduct your home mortgage interest. Because home amortization works by applying the highest ratio of interest to principal to your first payments, the home mortgage interest deduction is something that homeowners especially benefit from during their first year of owning a home.

2. Penalty-free Withdrawal from IRA Savings

You may know that if you withdraw funds in your IRA before reaching retirement age, you will have to pay an early withdrawal penalty. However, did you know that this penalty can be bypassed if you dip into your savings for the purpose of acquiring funds for a down payment on your first home purchase? That’s right – you can take a certain amount (consult your local Loan Officer for specific dollar amounts) from your IRA to put towards your down payment without being penalized for the withdrawal. Bear in mind, you may still have to pay taxes on it.

 

 

3. Home Improvement Tax Breaks

Do you need to make improvements on your home? If so, you should consider taking out a home equity loan to do it. When you use a home equity loan to finance improvements, you can deduct the interest on this loan just as you can deduct your mortgage interest.

4. Local Property Tax Deductions

When you buy a new home, you will have to pay property taxes on that home. You are allowed to deduct any of the real estate taxes paid to the taxing authority when filing your taxes. You can refer to the website of the IRS for more information about exactly how to do this.

5. Mortgage Interest Credit

Another tax benefit that first-time homebuyers can take advantage of is the mortgage interest credit, which is different than the mortgage interest deduction benefit. The mortgage interest credit directly counts against your tax bill, and allows you to claim 20 to 30 percent of the interest you pay every year back as a straight credit on your taxes.

Look to Hayden Homes to Find Your Brand New Home Today!

Buying a new home is a large expense, but it can also serve a number of financial benefits, too. If you have been thinking about buying a new home but aren’t sure if it’s the right decision for you, we have written a number of blogs regarding zero-down loans, costs of a new home, and more. To learn more about Hayden Homes, the benefits of a brand new home, and how we can help you to secure financing, contact us today! When you choose Hayden Homes, we help you find your dream home in Idaho, Oregon, Washington, and all throughout the Pacific Northwest!

***UPDATE***
With the recent changes to the tax laws that were past at the end of 2017. These will affect your taxes and what you can deduct beginning in 2018, therefore, we highly recommend that you consult your local Tax Accountant for specific items that you can take advantage of as a homeowner.

We talk about a few of them in our Blog on How the 2017 Tax Bill will affect homeowners.

How to Determine Which Home Loan is Right for You

IfFind a loan that works for your family you are thinking about buying a new home, then you probably already know that there could be myriad financing options available to you. Knowing which financing option to choose, and which type of home loan is right for you, are both important things to know. Review the following information about the different types of home loans available to individuals just like you.

Fixed Rate Mortgage
A fixed rate mortgage is one of the most common home loan structures. In a traditional fixed rate mortgage, a home loan is offered with a certain interest rate, and this interest rate is “fixed”–meaning that it does not change over the course of the loan–over time. Fixed rate mortgages can provide a sense of stability, as you always know what your monthly mortgage payment will be; it will not change.

Normal fluctuations in your escrow account may cause your monthly payment to change, but your actual mortgage will be fixed.

Adjustable Rate Mortgage
Adjustable rate mortgages (ARMs) are quite the opposite. In an adjustable rate mortgage, the interest rate can change over time. While ARM mortgages have typically been deemed risky, experts say that ARMs may have their place. As suggested by an article in The Washington Post you may consider an ARM if:

  • You plan to move before an interest rate spike will happen;
  • You expect your income to rise; or
  • You think you can invest your mortgage savings for a greater return elsewhere.

However, if you are planning to buy a home that you’ll live in for decades and you’re not sure what your income will be, you may want to consider avoiding ARMs.

VA Loan
A VA, or Veterans Administration loan, is a type of loan that is available only to veterans. VA loans are issued by private lenders, just like standard loans, but the VA guarantees a portion of the loan. These loans can help qualifying individuals purchase a home without a down payment or private mortgage insurance, secure low interest rates, and more.

USDA Rural Housing Loan
Another option for financing is a USDA (US Department of Agriculture) rural housing loan. With this type of loan, you can buy a home with zero down payment and a very low interest rate if you meet eligibility requirements, including income requirements and you are buying in what is considered to be a “rural” area. Many Hayden Homes’ neighborhoods are being built in areas that meet this standard!

FHA Loans
The Federal Housing Administration (FHA) is the largest insurer of residential mortgages in the world, and if you get an FHA loan, this means that you are getting a loan that is considered a “mortgage insurance backed mortgage loan.” Essentially, when you have an FHA loan, you are paying for mortgage insurance, which protects your lender in the event that you default on the loan. Because of this protection, FHA loans are often offered at lower interest rates, and eligibility requirements may be less strict, too. Less than perfect credit and a lower down payment (minimum is 3.5 percent) are OK, and some of your closing costs may even be covered.

FHA 203k Rehab Loan
Remember, an FHA loan is a type of loan that carries mortgage insurance and is from an FHA-approved lender. An FHA 203k rehab loan is different than a traditional FHA mortgage loan in that the former allows you to take out a loan with the purpose of buying a home and improving upon it. This means that if you are buying a home that is less than perfect and is in need of repairs, you can use your FHA 203k rehab loan to finance repairs to make the home livable.

Loans for People with Less than Optimal Credit
If you have poor credit, you may be under the impression that getting a home loan isn’t in your immediate future, and therefore you need to put the idea of buying a home on the back burner for awhile. However, there are still loans available for people with less than optimal credit, including many of the loan types mentioned above, such as the FHA loans, VA loans, and USDA rural housing loans. Some private lenders may also offer loans to those with less than optimal credit, although keep in mind that the interest rates on these loans may be higher than is reasonable.

See Our Homes for Sale Today in the Pacific Northwest
At Hayden Homes, we have a number of properties that may qualify for USDA rural housing loans (view full list here), and we also work with home financiers who can be helpful in answering questions and streamlining the home loan process to obtain your first home. To learn more, come see one of our brand new Hayden Homes today in Oregon, Washington, or Idaho!

10 Reasons to Sell Your Old Home & Buy New

If you are thinking about selling your old home and buying a new home, but aren’t sure if doing so is the right choice for you at this stage in life, consider this list of reasons to say goodbye to your current abode.

1. You’re Looking to Expand10 reasons to buy new

If you’re expanding your family, your current home may not be large enough to provide adequate space for you, your significant other and any children you may have. Expansion may also be necessary if you wish to add a guest bedroom, entertainment room or mother-in-law suite.

2. Mortgage Rates Are Still Low

Unless you’re planning on buying your new home in cash, understanding mortgage rates and how these rates may affect you is important. Currently, the average fixed mortgage rate for a 30-year loan is just above four percent.

3. Your Floor Plan Is Outdated

If you have an older home, you probably have an outdated floor plan that doesn’t make sense for your style or your stage in life. Common complaints include entry living rooms that hardly ever get used, cramped kitchen space and narrow halls and stairways. Open layouts – which were not popular more than a decade ago – are all the rage today.

4. Maintenance Will Cost You

If you have an older home, performing maintenance on that home may cost you a significant sum over the years. From plumbing to roofing fixes, new floors to new paint, buying a new home that’s up-to-date and low maintenance will last for years to come may save you time, money and stress.

5. Move Locations

Tired of where you live? Sometimes we all just need a change. Sharing a neighborhood with like-minded neighbors and living in a new, exciting subdivision with access to a clubhouse, pool and/or neighborhood park are all major perks!

6. It’s Time to Downsize

Just as some may need to upsize in order to create more space, others are looking to downsize. As you age, moving into a smaller home that requires less time and work to maintain may be ideal.

7. You Can Make a Profit

Depending upon where you live, the size, and the value of your home, you may very well make a profit by selling. By selling, you can leverage the equity that you have acquired in your current home, and put that towards a down payment on a new home and come away with a very manageable mortgage.

8. Demand Is High

It’s a great time to sell right now. The demand for buying homes is high in many areas of the country right now, meaning that if you want to sell, now may be the perfect opportunity to relocate to a new home in Oregon, Washington or Idaho. More demand means higher home value when selling.

9. You Want to Upgrade

Tired of carpet? Sick of linoleum? Interested in smart home features and brand new appliances, floors, and countertops? If you’re ready for an upgrade, buying a new home is where it’s at. Buying a new home may be more cost-efficient than remodeling your current home.

10. Health or Age Dictates a Change

As you age, or if you develop any health conditions, you may need to move into a new home for a variety of reasons, ranging from proximity to hospitals or health centers to the ease of one-story living.

These are just a few of the great reason why it may be the perfect time to buy a new home. If you’re ready to buy a new home, our home buying experts at Hayden Homes can help. Contact us today to explore our Hayden Homes’ communities and new homes for sale in Oregon, Washington and Idaho.

When Refinancing Makes Sense, and When it Doesn’t

If yIs Refinancing Right for me?ou’re a homeowner with a mortgage, you have probably heard about refinancing. While refinancing can help you to save money over time in some situations, and may be a smart financial move, it’s important that you understand what refinancing is and when it makes sense (and when it doesn’t).

What Is Refinancing?

Refinancing is the act of paying off your current mortgage by taking out a new loan. Typically, the new loan is taken out at a lower interest rate.

Why Do People Refinance?

People choose to refinance for a number of reasons:

  • To secure a lower interest rate. A person who is on an ARM mortgage may choose to refinance when the locked-in interest rate period has expired. Or, refinancing may make sense if you can secure a lower interest rate for another reason.
  • To free up some cash. This is the case when people have built up some equity in their home, and want to use some of it to pay off another loan or make a large purchase.
  • To make a mortgage more affordable. A person who is unable to make monthly payments on a 10, 15, or 20-year loan may see if they can refinance to a 30-year loan, which would lower monthly payments.

If you can secure a lower interest rate by refinancing, you may be able to save thousands of dollars over time. According to a certified financial planner quoted in TIME, refinancing for a better interest rate makes sense if you can cut your interest rate by at least half of a percent.

What Are the Downsides to Refinancing?

While refinancing can have some benefits, it’s not always in your best interest. For example, when you refinance, you incur a number of fees associated with the refinance process – depending on who you refinance through. A few of these fees might include: appraisal fees, lawyers’ fees, and bank fees. If you want to pay down your mortgage using your home equity credit, you may be penalized for this. Some lenders will charge homeowners fees for using home equity credit to pay down a mortgage.

Should I Refinance?

If you want to save more money over time and are confident that you can secure a lower interest rate, or if you are currently unable to make payments on your current loan, then refinancing may be for you. However, don’t get too focused on just interest rates. Loan terms, fees and fines, the value of your home, your credit, and your current income are all important considerations, too. In most cases, it is best to speak with a financial professional who can guide you through everything you need to know.

At Hayden Homes, we’re here to help you make smart financial decisions that will benefit you through your new home purchasing process. We partner with a Preferred Lender, and communicate with them throughout the entire loan process. If you are interested in purchasing a new home and have questions about financing, we, together with our Preferred Lender, are here to help you.

Understanding Financing and Costs of a New Home

Buying a new home is an exciting process. In addition to all of the planning and thrill that accompanies being a first-time homebuyer, something to consider is the cost. Buying a new home, as you probably already know, can be a little intimidating. That’s why we here at Hayden Homes make it a priority to help you navigate the waters before plunging in. It is important to understand how much buying a new home really costs you, by taking into account the different expenses that factor into the process. Let’s dive in.

Financing and Your Interest Rate

When you look at the face value cost of a home – i.e. $250,000 – you’re not just paying $250,000 if you are relying on financing from a third party. That’s because when you get a home loan, you are charged interest on the money that you borrow, and your interest rate will have an impact on how much you end up paying over the course of your mortgage. And of course, you can pay off your home faster by paying a little bit extra on your loan each month. Many people do, and the savings are substantial over time!

The interest rate you get on your home loan will vary depending on the market, the lender you work with, and upon your circumstances. Here at Hayden Homes, we have a lot of good advice for people who are trying to position themselves to qualify for the best possible interest rate on a home, so please don’t hesitate to reach out (link to contact us page) and we’ll be glad to steer you in the right direction. Things like paying off your debts, establishing credit history and saving money for a down payment can really help.

Other Things that Influence How Much Your Home Really Costs

Another cost that you should take into account is the cost of property tax. Property tax depends upon the state you live in, and may also be influenced by other factors, such as the size/value of your home and location. So before you purchase or build, inquire about the property taxes so it’s something you can plan for.

When you own a home, you will also need to have homeowner’s insurance and pay for routine maintenance of your home. That can be costly if you buy an older home in need of updating. However, if your home is newer, you will most likely have significantly lower maintenance costs, which is one of the benefits of buying a new home!

Hayden Homes is Here to Help

At Hayden Homes, we know that the most challenging part of buying a home can be seeking out and acquiring a mortgage. That is why we are here to help.  Together, we can help you understand the costs of homeownership especially when it comes to financing options.

Explore our website to learn more and be sure to check out our mortgage calculator to play with some numbers. Get in touch with us today! No matter your history, no matter your timeline, we help people from a variety of financial backgrounds find the homes of their dreams!