6 Essential Tips for First Time Homebuyers

Essential Tips for First Time HomebuyersBuying your first home is one of the most exciting ventures of your life. Whether you’re buying an existing home or working with a builder to construct a new home, there are a lot of things you need to keep in mind to set yourself up for the smoothest, most enjoyable experience possible.

1. You’ll Need to Budget for More than your Mortgage

One common mistake first time homebuyers make is building their budget around their new mortgage. In reality, your monthly expenses will be more than your mortgage payment. They’ll include:

  • Property taxes;
  • If applicable, mortgage insurance;
  • Utilities;
  • Maintenance costs;
  • Homeowner’s insurance; and
  • If applicable, HOA fees.

2. Don’t Open Any New Credit Lines Before you Close

Pay close attention to your credit while your mortgage application is pending, because everything you do will affect your credit score and your application. The time to make and large purchases or do things like finance new furniture for the home is after you close and move in, not while you’re waiting for approval.

3. Get Pre-Approved

Since the recent housing-market crash, securing a loan can be harder than it used to be. In addition, the housing market is competitive. Therefore, it’s better to get pre-approved before you start looking for a home or make an offer. Wherever you decide to go for your home loan, you can submit your financial information and get a pre-approval letter for the max amount that they are going to loan you. You may find, through this process, you can afford more than you think.

4. Be Willing to be Flexible – And Creative!

Don’t go into the home search with a specific type of home in mind. Instead, go into it with specific needs in mind, like the number of bedrooms you need or a home with a driveway and a garage. Do you want an open floorplan? Do you want something new with modern appliances and building materials? Asking yourself these types of questions will help you narrow down the homes you look at based on what fits your needs.

5. Determine your Options for Tax Credits and Other Perks

Many states and municipalities offer first time home buyers tax credits and other perks to promote purchases. You might qualify for a low interest mortgage loan, a specific tax credit, or a special assistance program that makes homes more attainable for first-timers. Your real estate agent and loan officer, should be able to talk to you about the various perks and programs you qualify for.

6. Don’t Get Too Emotionally Attached

This one’s as important as the others, and it can be more difficult. When you visit a home for sale or look at a model home with a builder, it’s easy to fall in love. You might immediately see what you’ll want to change in the home and how you’ll fill its spaces with your family. But until the day you close on a home, it isn’t yours.

There are different things that could cause you to have to back out of a deal between making your initial offer and closing on a home. If your buying resale, maybe the home inspection comes back that there’s substantial water damage inside the home’s walls, which means you’ll have to begin a large-scale renovation project before you can move in. Maybe something comes up in your personal life that causes you to have to put the home buying process on hold. Keeping an even head throughout the home buying process will help you make smart decisions and avoid heartbreak if things don’t pan out.

Move into your Dream Home by Working with an Experienced Home Builder

At Hayden Homes, we work with first time and experienced home buyers and we will be attentive and supportive during this exciting time in your life. Whether you’re looking in Oregon, Washington, or Idaho, our team can help you move into a home that’s just right for you at any stage in life. Contact us today. We look forward to answering any questions you may have about preparing for, and making, your first home purchase.

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!

The Dos and Don’ts During the Home Loan Process

In order to be approved for a new home purchase, potential homebuyers must work closely with their loan officer and provide a variety of documents including financial documents, proof of employment, credit check, and more. With your brand new dream home on the line, there’s a lot at stake, so here are some dos and don’ts to consider during the home loan process:

What-to-Do-during-the-home-loan-process

Dos: Things to Do While Your Home Loan Is Being Considered

As you’re getting your home loan documents together, or as you are waiting for a loan underwriter to approve your loan, there are a number of things that you can do to improve your chances of being approved. These include:

  • Do include all financial information in your loan application. Failing to disclose something can result in a delay in approval.
  • Do use the money you saved for your down payment, just for that. Your down payment. Odds are, you’ve likely saved for a while to pay for your down payment and you’ll want to use that money solely for that purpose.
  • Do be honest. Fudging documents to improve your chances of getting approved won’t work, and will likely hurt your chances instead.
  • Do follow up with the loan officer. Chances are the loan officer in charge of your loan is processing multiple other applications simultaneously. With so much on their plate, it never hurts to check in with your loan officer on a regular basis and ask questions about the loan process. Be responsive, so that the process can speed along.

Donts-during-the-home-loan-processDon’ts: Things to Avoid During the Home Loan Process

Just as there are a number of things that you can do during the home loan process, there are also a number of things that you should avoid doing when applying for a mortgage loan. These include:

  • Don’t open new credit cards or apply for other loans. Financial changes right before applying for a home loan, or during the approval process, can harm your chances.
  • Don’t quit your job, change jobs, or become self-employed. A bank will only give you a loan if you can prove that you have the means to repay it, which typically means a steady stream of income. Quitting or changing jobs right before getting a loan can result in home loan denial.
  • Don’t make any unusual or large purchases. Remember, a lender will consider all of your financial history and financial transactions before approving your loan. Things like buying a new car, enrolling in graduate school, or even buying large furniture before you buy your home, could hinder your chances of being approved.
  • Don’t take other financial risks/changes. This includes things like co-signing on a purchase for someone, changing to a new bank or making a large deposit into your bank. Your lender will want to ensure that you are financially stable and any of these things can hinder your chances of being approved.

Learn More About the Lending Process and Buying a New Home Through Hayden Homes

If you have fallen in love with your dream home by Hayden Homes, the next step is securing financing. At Hayden Homes, we not only have brand new homes for sale in Washington, Oregon, and Idaho, but we can help you get in touch with a lender to get the process started. Your preferred new homebuilder is ready to get you into your beautiful new home today!

Contact us today, we look forward to working with you!

 

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 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.

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.

First Time Home Buyers: The Next Hot Housing Market

McMansions, the term that has been coined to describe huge suburban homes that typically lack craftsmanship and originality, may be a thing of the past. To be sure, more people are looking to buy smaller, more manageable homes, especially millennials as they begin to participate in the housing market. This is because they are more affordable, more environmentally friendly, and more manageable, and they are selling like crazy in 2017!

Here’s a look in to what you need to consider about your first home, and how Hayden Homes can help you to find the one you’ve been looking for.

Millennials New Home Buyer

More First-time Homebuyers Enter the Market

The housing market is already surging, and with more first-time homebuyers entering the market – most of whom are millennials, or those born between 1980 and 2000 – the housing market is really kicking into high gear. According to an article in Fox Business, the percentage of first-time homebuyers typically sits at about 40 percent, a number that fell to 32 percent in 2015. Last year, that number climbed to 35 percent, and is projected to keep on gaining.

Many of those first-time buyers are not only millennials, but millennials who are more interested in efficient, smaller homes. Smaller homes dominate the new home market, with statistics showing that in the first quarter of 2017, 31 percent of speculative homes built by major builders were smaller than 2,250 square feet. That number is a 27 percent increase from a year ago.

Benefits of a First-time Purchase Hayden Homes

The benefits of buying a brand-new home are myriad, starting with the fact that now – while interest rates are still low – is a great time to buy. In addition to the financial benefits of homeownership, all new homes built by Hayden Homes offer advantages such as:

  • Environmentally friendly homes. Not only can you take advantage of a home that is smart, but you can also benefit from a home that is green, and equipped with the latest and greatest in energy efficient appliances and technology. This means that you will save money on utilities and energy expenditures, while also helping the earth.
  • Less maintenance. Newer homes require less work to maintain than do older homes, meaning that you do not have to spend your New-Homes-in-Oregon-Washington-and-Idahoweekends working on upkeep or expensive and time-consuming repairs. What’s more, our new homes come with a zero defect guarantee and one-year builder warranty, providing you with peace of mind.
  • The best in quality. Buying a new home from Hayden Homes provides you with an opportunity to get the best quality home available at an affordable price. The Hayden Homes brand is highly regarded as a value-driven home builder.
  • Financing with Hayden Homes. One of the potential challenges homeowners face is getting financing. What can make the financing process feel burdensome is dealing with the property inspection process, and technical financing regulations (like making sure a property is warrantable). When you work with Hayden Homes, we will refer to you a preferred lender who can help you get pre-approved fast. We want our customers to have the best options available when it comes to financing their new home.
  • Convenience of working with Hayden Homes. Working with Hayden Homes is a delight. Come tour one of our new home models – from there, we’ll help you get pre-approved for a loan with one of our preferred lenders, assist you in completing your EZ builder contract, help you to design your home with all the finishes and fixtures that you want, and handle the entire construction of your home. We promise to be quick to respond and communicate with you.

Become Part of the New Hot Housing Market

If you are a millennial, a new home purchase is the smart choice for your life, your budget, and your family. Hayden Homes offers a plethora of new home models that are more affordable, easier to maintain, you can personalize, and offer the latest and greatest in high tech features compared to old homes. When you work with Hayden Homes, we have convenient financing options available, and guarantee your satisfaction throughout the building process.

Contact Us Today About Our New Homes For Sale in the Pacific Northwest

With building projects in multiple states (Idaho, Oregon, and Washington), Hayden Homes is your go-to homebuilder for high quality, affordable, and fitting homes that have everything you are looking for. To learn more, get in touch with us today. Browse through our home plan gallery! We are excited to help you construct the home of your dreams!

Terms Every Homebuyer Should Know

ITerms every homebuyer should knowt may be the ideal time to purchase a brand new home and Hayden Homes offers new homes in Oregon, Washington, and Idaho.  But before you get started down this important path to home ownership, it’s important that you understand the lingo.  By familiarizing yourself with terms associated with the homebuying process, you’ll have a better understanding of the process and what to expect and won’t be caught off guard as you navigate the process.

Getting Pre-Approved

The most challenging part of buying a home can be seeking out and acquiring a mortgage. One of the first things to do in this process is lender pre-approval.  You can do this with a lender of your choice. When working with a mortgage lender during this initial process, you will find out how much home you can afford to buy prior to ever starting the physical search. This process contains no obligation to the lender or you as the home buyer. Completing this desired first step helps ensure that you are qualified to purchase your new home and will say to your Realtor or home builder that you are serious about moving forward, allowing them to best help you find the home of your dreams.

Appraisal

An appraisal is the process by which the value of the home is determined. This process is done by a qualified and certified appraiser. The process is important for you to know the value of your home but also required by the lender to verify the purchase price is equal to or less than the property value.

Earnest Money

At the time that you make an offer on a home and the seller accepts that offer, you will be asked to put down earnest money. Earnest money is different than a down payment, although the earnest money will be used towards your final closing/down payment costs. Earnest money is a check that’s given to show your good faith effort in securing a loan and commitment to purchasing the home. The amount of earnest money required will vary from builder to builder but at Hayden Homes, we typically require x amount for our new homes purchased in Washington, Idaho, and Oregon.

Down Payment

A down payment is the amount of cash that is applied towards the purchase of your new home at the time of closing.  When purchasing a new home, a cash down payment is typically required.  However, down payment amounts vary depending on the type of loan being secured.  It’s important that you discuss your individual needs with a qualified new home lender like Washington Trust.

Escrow

Escrow may be the most confusing of all of the homebuying terms, but it’s one of the most important to know. Essentially, escrow is the process by which a third party holds money that will later be transferred to a separate party at the conclusion of a transaction. Remember the purpose of earnest money discussed above? Earnest money doesn’t go directly into the hands of the seller; instead, it is held “in escrow” until you and the seller finalize the sale.

Closing

Finally, closing – the day that every new homebuyer waits for! During closing, all documents and contracts related to your purchase will be reviewed, funds will be exchanged, and the title and deed of your new home will be signed over to you. Congratulations – you’re a new homeowner!

About Hayden Homes
Established in Redmond, Oregon in 1989, Hayden Homes has provided over 17,000 new homes, in over 300 communities, to price conscious, value-driven homebuyers in underserved, secondary markets throughout Washington, Oregon and Idaho. Hayden Homes continues to be the largest privately-owned new home builder in the Pacific Northwest.

With a commitment to building a strong community together, Hayden Homes has contributed 3.2 billion dollars to local economies and has created more than 62,000 jobs since the company’s inception. Hayden Homes supports philanthropic efforts in the communities in which they build and have contributed more than 18.3 million dollars in charitable donations with the flagship of their giving through the 501(c)(3) Non-Profit, First Story. To date, First Story has provided 82 deserving and capable families throughout the Pacific Northwest with a safe, healthy affordable home and a first step toward financial freedom. The Hayden Homes brand family of companies includes Simplicity by Hayden Homes, Wise Size Homes and Hayden Homes, all providing an unparalleled selection of opportunities for those looking to purchase a new home