How the Recent Unchanged Federal Reserve Interest Rate Improves Mortgage Rates

Federal-Reserve-announces-they-will-not-increase-interest-rates-good-for-mortgagesA year ago, it was predicted that Federal Reserve Interest Rates (national interest rates) were going to continue to climb all through 2018 and carry into 2019 as the economy showed great signs of improvement. Then, as you may have heard, the Federal Reserve announced that they will hold rates steady for the remainder of the year. This is good news for those looking to purchase a new home. How, you may be wondering? First let’s briefly explain how interest rates affect your purchasing power as a current or future homebuyer.

If you’re going to use a home loan to purchase your new home, the question of how much you can afford can also be called your ‘purchasing power’. Any change in the national interest rates can either improve this power or make it harder for you to buy a home. The higher the interest rates the more expensive your home will become and the higher your monthly mortgage payment in terms of Principal and Interest, (P&I only), will be. This is not factoring in homeowner’s insurance or property taxes, since those vary depending on the home’s location and your personal coverage options.

These lower rates can make a huge impact on home affordability & purchasing power. The difference between 1% in rates on a $250,000 home mortgage can save you nearly $150 per month and over $42,000 in interest over the life of your loan! That’s a lot of money saved in the long run.

Back in November rates we’re higher than we’ve seen since March of 2011. And they are back to the lowest we’ve seen since February of 2018. Since the Federal Reserve announced that they will hold rates steady for the remainder of the year and if you’ve been on the fence about purchasing a home, now is the time to make a move and get into that new home.

Before you start looking at new home communities, make sure you get your pre-approval for a mortgage. This will help you confirm that the amount you think you can pay is in line with what you will qualify for. With new homes throughout Oregon, Washington and Idaho, contact a Community Manager today and we can get you in touch with a Loan Officer to get pre-approved and get started down the path of buying the new home of your dreams.

Freddie Mac Source: http://www.freddiemac.com/pmms/pmms30.html

**Written as of 3/21/2019. Rates may change at any time. Please consult a Loan Officer for specific details on current interest rates and to get pre-approved for a home loan.

Tips for Buying and Selling a Home at the Same Time

Tips-for-Buying-and-Selling-a-home-at-the-same-timeAre you a homeowner looking to move into a new home? Navigating the homebuying process as a second-time homebuyer can be challenging, especially if you have a home you need to sell as well! There’s a lot of logistics you need to coordinate! This home buying guide will walk you through some strategies to keep in mind when you need to buy and sell a home at the same time.

Research your local housing market

The local housing market will play the biggest role in the timing of your home purchase and sale. Before you list your home or start looking for a new one, you’ll want to review your local housing market and see how long it’s been taking to buy and sell homes.

  • Buyer’s Market: a buyer’s market means there are more homes available than buyers looking. This means homes will typically stay on the market longer and buyers have more options to choose from. In a buyer’s market, you’ll have an easier time buying a new home than selling your current one.
  • Seller’s Market: a seller’s market means there are more buyers than homes available. This is a hot market! You’re more likely to sell your home first before you’re able to buy.

Choose an experienced real estate agent

Navigating the ins and outs of home buying and selling can be difficult so it’s helpful to have a professional available to guide you through the process. Hire a trusted real estate agent who understands your housing market. They will be able to advise on the expected market value of your home and the best strategy to buy and sell your home at the simultaneously.

Selling your home first
Selling your current home before buying your new home can be the less stressful option. The benefits of selling first mean you know exactly how much you can spend on your next home and have funds for the down payment. However, you may need to find alternative housing to tide you over until you’re able to move into your new home. Here are some options you can consider if case you sell your current home first:

  • Make an offer with a settlement contingency. Once your home is officially on the market, begin looking for new homes. You’ll want to hold off on making any offers (if possible!) until you’ve accepted an offer on your current home. The settlement contingency means you’ll buy the new home once your current home closes. This method is best in a seller’s market when you’re more likely to receive multiple offers.
  • Get a short-term rental. Secure temporary housing and storage (whether a short-term rental or staying with understanding family) until you’re able to close on a new home.
  • Create a rent-back agreement with the new owners. If the new owners of your current home agree, you can sign a rent-back agreement that will allow you to stay in your home for a set period of time in exchange for rental payments. This will give you some additional breathing room to find your new dream home without the stress of finding temporary housing.

Buying your home first

Sometimes you find your dream home faster than planned. This is great because then you’ll only have to move once, instead of having to find a short-term rental or stay with family in the interim. If you happen to buy your new home before selling, you have a few options:

  • Extend your closing. If you’re sure your home will sell quickly, you can request to extend the closing date of your new home past the typical 30-45 days.
  • Apply for a bridge loan. Bridge loans are short-term loans that cover your down payment until closing. This is an enticing option; however, it can be difficult to qualify for a bridge loan and not every lender offers them, so you’ll want to check if this is available through your lender early in the buying process.
  • Apply for a HELOC. HELOC stands for home equity line of credit. This enables you to use your home as collateral and borrow up to a certain amount.
  • Rent your current home. If you’re financially able to purchase your second home without needing to sell your current home, you can consider turning it into an investment property and rent it out.

Don’t let the process rush you

Whether you buy or sell first, try your best to keep fear from rushing you through the decision process. You may want to create a contingency plan in case you sell your home before you buy. This will help keep some of the anxiety at bay since you already know where you’ll be going next. Conversely, if you buy your home first, don’t feel pressured to accept a less than ideal offer because you’re unable to float two mortgages.

Buying and selling a home certainly has his challenges, but if you’re properly prepared, you can navigate this journey with flying colors.

With new home communities in Idaho, Oregon, and Washington, we offer affordable new homes that fit your needs at any stage in life, backed by our commitment to quality. Visit us online at Hayden-Homes.com to learn what makes a Hayden Home the right new home for both you and the entire Pacific Northwest.

New Year’s Resolution Ideas for Buying a Home

New Years Resolution Ideas for Buying  a HomeNew Year’s Eve is just around the corner, which means that if you haven’t already started thinking about your New Year’s resolutions, it’s time to get on it! If one of your New Year’s Resolutions is to figure out how to buy a home in the coming year, then make a series of smaller, more manageable resolutions to help you reach the big one. Here are some ideas to help you prepare!

Set a Savings Goal

If you’re buying a new home, you’ll most likely need to make a down payment on that home, and it could be the full 20 percent, or a lesser amount. Most people don’t have the kind of cash lying around without diligently saving for months or years, which means you should start saving now. Even if it’s only a little bit, having a clear picture of your finances and committing to putting away a certain amount each month can help a lot in the long run. Keep in mind that you will most likely be approved for a loan, even if you don’t have the full 20 percent down payment.

Fix Your Credit

Your credit will have an impact on whether or not you get approved for a mortgage loan, and if so, what your mortgage loan interest rate will be. If you have poor credit, you should start working to fix your credit asap. This means putting a plan in action to:

 

    • Pay down your debt;
    • Making all payments on time and in full;
    • Reduce your credit card balances or stop using your credit cards completely; or
    • Consolidate your debt.

 

If you have poor credit, you may be unable to secure a loan, or may get stuck with a high interest rate.

Get Your Documents in Order

Alright – you’ve fixed your credit score, saved up a good chunk of change for a down payment – what’s next? Now you need to start getting all of your mortgage loan documents in order. In order to get pre-approved for a loan, and certainly before the mortgage lender will issue you a loan, you’ll need to provide a variety of documents. These documents will likely include: at least two years’ worth of tax returns, W-2s, employment history, income/bank statements, and proof of assets. The sooner you start organizing these documents, the sooner you’ll know where you fall short and can start taking steps to correct this.

Find the Perfect New Home

Of course, before you can buy your new home, you have to find it first! Take time to explore your options, look at homes in different neighborhoods, determine your budget, and consider whether you want to buy brand new or used. Newer homes often have many benefits that older homes lack, require little maintenance, and can be personalized to fit your style!

Our Home Builders Can Help

At Hayden Homes, we have your dream home for sale! Come see our new homes sprinkled throughout the Northwest, in Washington, Oregon, and Idaho. Buying your first home is exciting – let us help!