Going Solo on Buying a Home – Tips for Buying a Home by Yourself

Going solo - tips for buying a home by yourselfMarried couples are the most common homebuyers. It makes sense because it’s typically easier to afford a down payment and qualify for a larger home loan with two income streams. But that doesn’t mean you have to wait until you’ve walked down the aisle before becoming a homeowner!

There’s been an increase in single buyers making their way into the housing market. With the way the current market is, we may see more single people considering buying a home. Are you thinking of buying a home on your own? Here’s everything you’ll need to know to make your homeowner dreams a reality.

Identify your long-term goals

Be prepared to answer the question, “Why do you want to buy a home?” Are you tired of renting? Do you want to put down roots and eventually start a family? Are you looking for a long-term investment?

The home you ultimately buy will vary based on your current and future goals. Take a look at your lifestyle and your future goals to determine if buying a home makes sense. If you want to travel a lot and move around, buying may not be the best option right now.

There’s a lot of freedom and stability that comes with owning a home but there’s also a lot of responsibility as well. Be sure you’re ready before taking this big step.

Be realistic about your budget

Your budget will be your guiding force through the buying process; it’s important that you’re honest about your spending and what you can afford. Review your current income and monthly expenses to determine how much you can afford. Mortgage calculators can provide an estimated price range that fits your budget.

There are additional costs to homeownership than just the mortgage payment; you’ll also need to cover insurance, property taxes, and maintenance so include those costs when calculating your budget.

You can practice paying a mortgage each month to see if you can swing the payment. Set aside the difference between your estimate mortgage payment and your rent in your savings. This will give you a good idea if you can afford to buy a home and gives you some savings to start with!

Strengthen your finances

The key for single buyers is understanding their budget, income, and the stability of that income. Single buyers must show lenders that they’re capable of qualifying for and making the monthly mortgage payments on a single income. Taking time to strengthen your financial history will make you the best possible application, showing lenders you’re more than capable of managing this loan. You can accomplish this by saving money for a down payment, paying off debt, and improving your credit score.

Bulk up your emergency fund

As mentioned earlier, homeowners are responsible for every aspect of owning a home, including maintenance and repairs. Build your emergency fund to cover unexpected housing expenses. Having about three to six months’ worth of mortgage payments and living expenses is a good benchmark to achieve. Be sure to replenish it as you use it!

Make a priority list

One of the benefits of buying a home by yourself is not having to compromise with a partner. You can pick the house you love and want. But you still want to create a list the features you need in your home: size, number of bedrooms and bathrooms, location, and any other important features you need (consider things that would be prohibitively expensive to add later or will affect your quality of life). Having a priority list will keep you focused on finding the right home and not get carried away by a home with nonessential features like walk-in closets or granite countertops. This home may not be your forever home and that’s okay! Buy what you can afford and need in this season of your life.

Buying a home as a single person can be intimidating but is also rewarding. Hopefully you feel more empowered to buy your own home. When you’re ready, visit us at Hayden-Homes.com to learn more about our new homes in Oregon, Washington, and Idaho. You can use our mortgage calculator to determine what you can afford, view our plans, and reserve your dream home online.

Common New Homebuyer Mistakes and How to Avoid Them

Essential Tips for First Time HomebuyersWe know that when you are buying your very first home, it’s an exciting and emotional time. We also know it can be stressful. There are a few things you can do to help alleviate some of these feelings and stress by educating yourself on these common mistakes, we see first time homebuyers make.

First, we’ll cover a few financial mistakes and ways to avoid them.

  1. NOT CHECKING ON YOUR CREDIT REPORT AND FIXING ERRORS THAT EXIST

This is one of the most important mistakes that is easily avoidable and can make a huge impact how much you can afford. If you don’t work to build your credit, and you don’t check your credit score regularly, your score may be lower than you expect. This can affect the interest rates you are eligible for when you’re working on getting a loan. Even the difference of a few percentage points on a mortgage loan can cost or save you thousands of dollars in the long run.

How to avoid this mistake: Checking your score regularly (you can request a free credit report each year from each of the three main credit bureaus) can help you identify any errors that arise and ensure you get them taken care of and off your credit report quickly. This will not only give you peace of mind but, will help you build a good credit score.

  1. NOT LOOKING INTO HOME LOAN OPTIONS SUCH AS VA, FHA AND USDA HOME LOAN PROGRAMS

If you’re in the market for your first home, there are quite a few things to learn. One of which, is there are multiple home loan options to choose from. These include VA loans, available for veterans, as well as Federal (FHA) loans and several others. For many first-time homebuyers, finding ways to minimize your down payment may be important, and some of the government programs make it easy to buy a home with zero or a minimal amount down.

How to avoid this mistake: Take some time to lean about the various loan programs and determine what your goals are prior to selecting a specific loan program. We have a blog that covers each loan type in more detail to help determine which home loan type is right for you. Be sure you discuss these options with your loan officer as they will be able to assist you in making the right decision.

  1. USING YOUR CREDIT BEFORE THE SALE IS FINAL

This is an important one, and one that you may not have thought about. The period between when you apply for your mortgage and when you close your home is critical. You’ll want to leave your credit alone if possible.

Why? A lender’s decision to give you a mortgage is based on your debt-to-income ratio as well as your credit score. Each time you apply for, or use your credit card, your score takes a minor hit and how much income you have compared to your total credit (debt-to-income ratio) decreases. Which isn’t good from the lender’s perspective, when they are deciding whether to give you a mortgage or not.

How to avoid this mistake: Don’t make any large purchases or use your credit cards while you’re in the process of getting approved for a home loan.

  1. BITING OFF MORE THAN YOU CAN CHEW (FINANCIALLY)

Given the high demand for homes and the growing prices in many markets in which we build, this can be tough. However, it’s important to understand and really dive into how much house you can afford. If not, you could end up looking at houses that you can’t afford or visiting homes that are below your optimal price level.

For many first-time homebuyers, it’s important to buy a home and get a mortgage with a comfortable monthly payment. Sometimes it’s a good idea to aim low.

How to avoid this mistake: Use the mortgage affordability calculator on our website to help give you a sense of the price range that is affordable to you, what’s a stretch and what’s aggressive.

Next, here are a few common mistakes we see once you own your home and how to avoid them.

  1. NOT CONDUCTING ROUTINE MAINTENANCE

On the plus side, you’re considering purchasing a new home, which means you will have significantly less maintenance to do on your home than if you were purchasing a resale home. However, even new homes need a little TLC to help keep them in their best shape. This includes changing filters regularly, preparing your home for seasonal changes, and staying on top of routine maintenance.  This is the best way to ensure small problems don’t turn into major repairs.

How to avoid this mistake: Not sure what to do or when? Visit the home maintenance page on our website for videos and seasonal home maintenance checklists.

  1. WANTING TO MAKE MAJOR RENOVATIONS TOO QUICKLY

When you buy a new home, this is something you won’t have to worry about. However, in the event you do want to make some changes, as tempting as it might be to make immediate changes, doing so could be a decision you end up regretting.

How to avoid this mistake: Live in your house for a few months to get a better feeling of what you like and what you don’t. Then determine what are your priorities and come up with a plan and budget before making any major changes.

In conclusion, while there may be other common mistakes out there, these are a few of the top mistakes we see people making and how best to avoid them.  If you’re in the market for a new home or have additional questions, our team of highly educated and trained sales professionals can help. Contact us today to learn how you can turn your dreams of homeownership into reality!

How to Save for a New Home While Renting

How to Save for a New Home While RentingAre you currently renting but dream of owning your own home? You’re not alone! There are a lot of benefits of owning your own home but it can feel overwhelming trying to figure out how to save.

How do renters make the leap to home ownership? While the answer depends on each individual person, you can use these general tips to create a plan that can work for your situation.

Determine how much you need to save

The first step to saving is knowing what your target number is. There are a lot of costs involved in buying home, one of the largest being the down payment. You may have heard that you need a 20% down payment but that isn’t required. Depending on the type of mortgage you receive, you may be able to buy a home with as little as 3.5%*.

Explore our mortgage calculator to play with some numbers and figure out how much of a down payment you may want to save. Mortgage calculators are a great way to estimate how much your monthly mortgage payments can be and how your down payment can affect the amount.

Review your budget

You can’t plan for the future without knowing where you’re at now. Once you’ve set your target savings amount, its time to review your budget to see where your money is currently going and identify areas you can cut back.

It can sometimes feel impossible to save money without feeling deprived but by looking at your budget, you may be able to find ways to save money while still enjoying your daily coffee shop visit. If you’ve never created a budget before, the 50/30/20 budget plan is an easy place to start.

Set a realistic savings goal

Keep your ambition in check when creating a savings goal. You may want to fast track your nest egg and set aside a large amount each month, but if you find it difficult to consistently set aside that large amount, you may end up more discouraged. Instead, choose a sustainable savings amount you know you can meet each month. It may mean being a renter a little longer but your finances and well-being will be in a much better state.

Reduce spending

Find realistic ways to cut back on spending and discretionary purchases. While going without heat during the winter may save you plenty of money, trying to survive a Northwestern winter without heat is miserable! Instead, consider opting out of cable to a streaming service. You can look for an affordable apartment or take on a roommate to help with the costs. Take a close look at your expenses and see if you’re paying for services you no longer use. Cancel the service and reroute that money towards your savings!

Pay down debt

One of the best ways to free up money for savings is dealing with high-interest debt like credit cards. Find a repayment plan that helps you tackle your debt as quickly as possible. Not only does paying debt increase cash flow, it also raises your credit score and balances your debt-to-income ratio, two things mortgage lenders use to determine your loan eligibility.

Save windfalls

Unexpected money is always a treat so funnel those windfalls like tax returns, bonuses, or cash gifts towards your down payment fund instead of spending it. Every little bit helps and shortens your waiting time. If you get a raise, stomp out lifestyle creep by depositing the extra money into your savings and continue to live off your old income level.

Automate your savings

Make saving easy by setting up automatic transfers into your savings account so you’re not tempted to spend your hard-saved money.

Scale back on large expenses

It may be necessary to scale back on large expenses while saving for a home. Instead of taking big vacations or giving elaborate holiday gifts, find ways to cut back on those expenses. Depending on how much you spend on vacations, consider either taking shorter and more affordable trips or skipping one for the cause. Likewise, instead of giving extravagant and expensive gifts, stick to a budget.

Research down payment assistance programs

Down payment assistance programs are available to help first-time home buyers secure grants or low-interest loans. These programs are available at the federal, state, and city level so program qualifications and requirements vary. Check with the state housing authority to find out more.

Start saving for a down payment today!

Creating a solid savings plan will make home ownership is possible and within reach, even when you’re renting. These tips will allow you to successfully save money while still enjoying life.

Once you’ve hit your down payment savings goal, visit us to learn more about our homes. Hayden Homes builds new single-family homes in Idaho, Oregon, and Washington for every stage of life. We can’t wait to welcome you home!

Discover the Benefits of Homeownership

DISCOVER THE BENEFITS OF HOMEOWNERSHIPFor many, homeownership is the pinnacle of the American Dream. It’s a milestone we look forward too even with all of the responsibilities that are associated with owning your own home. However, there are plenty of benefits that come along with it! If you’re renting, or in the market for a new home and you’re wondering what are the benefits of homeownership, here are some of the benefits you can plan for when you own a home.

It’s generally a good investment

Owning a home has always been described as a savvy financial investment since it’s one of the main ways of accumulating wealth, as long as you purchase a home you can afford. As your property value increases over time, you set yourself to get a substantial return when its time to sell.

Build equity

Equity is what you can sell your home for minus what you owe. You own a little more of your home with each mortgage payment, decreasing the amount you owe and increasing your equity. There are two ways to build equity, usually at the same time:

  1. Reducing how much you owe and
  2. Increasing your home’s value, whether through home improvements or just waiting it out.

Enjoy tax benefits

Homeowners enjoy a number of tax breaks, most notably deducting mortgage interest and property tax payments (the latter if you itemize). You may also be able to deduct some closing cost expenses the first year you own your home. Another handy tax benefit comes when you sell: if your home has been your primary residence for more than two years, you’ll be exempt from capital gains taxes up to $250,000 ($500,000 if married filing jointly) when you sell.

Predictable housing costs

Unlike renters, home owners will know their monthly mortgage payments will stay relatively the same, especially if you have a fixed rate mortgage. You won’t have to worry about increasing rent potentially pricing you out of your home and neighborhood.

Create the home you want

Owning your own home means you can create the home you’ve always wanted. You can own pets without the costly pet rent or deposit, paint rooms whatever color you want, change the flooring or hardware, make updates. The possibilities are endless when you no longer have to get permission or change everything back when it’s time to move.

Privacy

Living in a detached home gives you the privacy you don’t get in an apartment. No more dealing with thin walls and noisy neighbors stomping around above you.

For some, experiencing the feeling of accomplishment that comes with owning a home is the ultimate goal; to have a place to create new memories, enjoy celebrations, and share life with family and friends. Simply put, there’s no place like home!

We’re ready to help whenever you’re ready to experience the benefits of homeownership! We build new homes for every stage in life in Oregon, Washington, and Idaho. Contact us to get started with building your own brand new home!

From Dreams to Beams – Part 1: What’s True When Building New?

We are excited to present the first part from our series called, From Dreams to Beams, What’s True When Building New – where we discuss what’s true when building a new home and explain our new home building process. In this first part, of the series, we explain what to expect when build a new home with Hayden Homes and provide answers to some of our most commonly asked questions.

Q: What is the Hayden Homes building process?

  • It is our goal to make the building process as easy and streamlined as possible. Each community offers a number of floorplans that we are able to personalize to you. Whether you need space for an office, play room or work out area, we have plans to fit your needs.
  • From there, our Project Manager will then prepare and submits plans and specs to the City building department after the Purchase and Sale Agreement is written.
    • This typically takes a few weeks to receive back depending on where you are building your new home.

Q: Is there anything Hayden Homes requires at time of contract?

  • We ask for a deposit at time of contract, however, by purchasing a new construction home, it affords you more time to save for a down payment and closing costs prior to the house being completed.

Q: What types of appointments can someone expect during this process?

  • You’ll experience several different appointments and weekly updates from your on-site agent periodically throughout the build. Either done on-site or by phone.
  • This includes:
    • Pre-Construction Meetings:
      • This meeting allows us to align expectations with you, to prepare you for the construction process, and covers the most important construction details of your new home.
    • Pre-Drywall Meetings:
      • Your home is now in framing and your electrical and plumbing is typically in. We will take you on a tour of every room in your home and discuss its progress. At this appointment, we will walk through the interior and exterior, review the structure and systems behind the walls of your new home

Q: During these appointments, where you tour your new home under construction, who is typically attending?

  • During the home tours, it will be you, your Community Manager, Project Manager, as well as if you have a Realtor, Agent, they would be there as well.

Q: At what point should I get a pre-approval?

  • We will need to have it prior to writing a Purchase and Sale Agreement.
  • However, it is nice to have done in advance, so you know what you’re comfortable with and can expect for a monthly payment.

Q: In regard to Lenders, what should you expect? Will the lender reach out to the homebuyer or will they be contacting our Community Managers directly?

  • On your pre-approval letter, your loan officer’s information will be on that letter. We will ensure that we CC them when emailing your regarding all of the milestones of the build of your new home. This allows for them to be informed of the progress of your home as you are.

Q: Does Hayden Homes do any inspections throughout the build process?

  • We strive to provide the highest quality new home, through our comprehensive, over 300-point Inspections we are committed to providing a quality home.
    • Each Hayden Home undergoes several Quality Inspections as well as a third-party verification that your home was built right the first time.
      • The homebuyer is also able to have the home inspected, at your own cost, prior to the new home orientation.
    • For extra peace of mind, we provide a comprehensive one-year warranty.
  • Prior to your home closing, we will do a New Home Orientation
    • This will be in an in-person appointment with your Community Manager, Project Manager and Customer Service Manager.
    • In addition to showing you the best ways to maintain and protect your investment, we will explain all the features and benefits of your new home and ensure you are aware of all the warranties.
  • Key Turn Over: on closing day, we will schedule a special appointment to deliver the keys to your new home

Q: At what point is someone is able to choose and select colors for their new home.

  • After the Purchase and Sale Agreement, your Community Manager will schedule a time for you to come in and choose your colors for your new home. This happens usually within 14-days of writing your contract.
  • Each of our model homes, has a designated design center that allows you to personalize structural features, select your color palette, and choose finishes to make this home uniquely yours.
  • We have worked with an interior designer who created color packages that can help people get started with their selections and makes the process really fun and easy!

Q: How long does it take from writing your Purchase and Sale Agreement to receiving the keys to my new home?

  • For example, in South Washington, it takes anywhere from 100 – 140 days from when we receive permits back from the City. This varies by region, please reach out to a Community Manager in your region to find out how long this process takes in your area of interest.
  • Weather and the different municipalities, do play a factor in our build time as well.
  • We are committed to staying in communication with you, to explain the build times from the beginning, and of course providing updates along the way.

Q: Am I able to go into my new home at any time during the build and conduct my own tours? 

  • You may feel like you don’t want to be a bother to us… but our customers are never a bother to us. We love interacting and being with you through this customer journey.
  • For your safety, since your home is being built in a live job site, we request that you contact us prior to going out to the home to ensure you have the appropriate safety (hart hats) and we can be there with you.
  • We know this is an exciting time for buyers, and we don’t mind setting up appointments to ensure your safety.

Q: Why Hayden Homes? What makes Hayden Homes different than other new home builders, in the market?

  • When you buy a Hayden Home, you will see and experience our commitment to quality.
  • You will work with a team who stands by their work and enjoy a simple home-buying process that is unlike any other in the market.
  • Our customer service is one of a kind, and we offer a 1-year warranty.

Q: What if I don’t want to go into a model home, is there a resource I could use to price out my house?

  • The Design Your Home feature on our website, allows you to personalize your floor plan of choice with the options and colors.

It is important to us that our homebuyers are informed about the home building process. If you have any additional questions, we would love to hear from you and help get those questions answered. Contact us today with any additional questions and to get started with building your own brand new home!

How Much Money Do You Need to Buy a Home?

Couple sitting in their home on their laptop looking up How Much Money Do You Need to Buy a HomeWhen you think about buying your first home, you’re probably already calculating how much of a down payment you’ll need to save based on the price of your desired home. However, those aren’t the only costs you need to consider when it comes to buying a house.

The listing price and down payment are just the start. There are additional costs you’ll need to cover before getting the keys to your new home and chances are, it’s more than you think. Many new first time homebuyers are surprised by how much it actually takes to buy a house. The final costs will vary based on the purchase price but here’s a good run down of the additional costs you should account for when creating your homebuying budget.

Down Payment

This is the most obvious cost following the listing price. The down payment is a percentage of a house’s purchase price that is paid upfront. For example, with a 20% down payment, you’ll pay at least $50,000 for a $250,000 home.

While a 20% down payment is the gold standard, you may be able to buy a house with as little as 3.5% down depending on the loan type (VA and USDA loans don’t require a down payment but additional conditions may apply so check with your lender).

Be aware that if your down payment is less than 20%, your lender may require additional private mortgage insurance (PMI). Saving for a down payment can feel daunting but it’s possible. We’ve rounded up some ideas to saving feel more achievable.

Closing Costs

Closing costs cover the fees for the services and expenses needed to finalize your mortgage. This can include property-related fees like appraisal and home inspection, loan-related fees like the application and origination fees, attorney’s fees (if required), mortgage-related fees like PMI, property taxes, annual fees, and insurance, and title fees (this may vary depending on your location).

Buyers can expect to pay between two to five percent of the purchase price. For the same $250,000 home, closing costs may run between $5,000 to $12,500. You may be able to negotiate closing costs be paid by the seller or take advantage of builder incentives that cover closing costs, if available.

Cash Reserves

This cost usually catches homebuyers by surprise. Most lenders require buyers to have additional cash available after all closing costs are paid. Lenders typically like buyers to have at least two months of mortgage payments available in reserves. This makes sure the buyer can make their payments during the first few months of ownership. If your mortgage payment is around $1400, should plan to have at least $2800 in reserves.

The cash reserves don’t need to be deposited into an account with the lender. The lender will need to verify you have the funds available in an existing savings or checking account, or money-market fund.

Other Costs to Consider

Once the home is officially yours, you can start planning for moving costs and any additional furniture you may need to fill out your home, especially if you’re upgrading from an apartment, or a smaller home to a larger more spacious home.

If you’re preparing to buy a home soon, understanding these additional costs will be helpful. We are not a mortgage lender, so we highly recommend that you check with your individual mortgage lender to determine how much you should prepare to have on hand to buy your new home.

When you’re ready to make the jump into homeowner, we’re ready to help! Hayden Homes builds new single-family homes in Idaho, Oregon, and Washington for every stage of life. Visit us on our website to learn more about our homes and new home communities.

The Credit Score You Need to Buy a House

The Credit Score you Need to buy a houseAn essential part of preparing to buy a new home is understanding your credit score. The credit score is one of the most important numbers when it comes to your financial life. Lenders use your credit information to determine your creditworthiness and ability to repay loans. While everyone understands the importance of having a “good” credit score to secure a mortgage but may not know what score is “good” and what credit score you need to buy a house.

What is a credit score?

Your credit score is a three-digit number between 300 and 850 that represents your credit risk. Credit scores are based on your credit history, including payment history, amount of debt, and the length of your credit history. Each credit bureau uses their own calculation model to determine your credit score, so you may have a slightly different score for each bureau. In general, the higher your credit score, the more likely you’re able to repay a loan. Credit scores have a big influence on the interest rate you receive on loans, so you can potentially save thousands of dollars with a higher credit score.

What’s a ‘good’ credit score?

Traditionally, a credit score of 670 or above is considered ‘good.’ Here’s a general breakdown:

  • 579 and below: Very Poor
  • 580 to 669: Fair
  • 670 to 739 Good
  • 740 to 799: Very Good
  • 800 and above: Excellent

Here’s a quick guide to understanding credit scores.

What’s the minimum credit score needed to get a mortgage?

Each loan type and lender have their own minimum credit score requirement so check with your individual lender for specifics, however, here are some benchmarks you can use to start planning:

  • Conventional loans: these are the loans you’re probably thinking about when you think about mortgages. Unlike FHA or VA loans, these follow standards set by Fannie Mae and Freddie Mac and are not insured by the government. Most lenders require a minimum 620-credit score to qualify for a loan.
  • FHA loans: FHA loans are common for first-time homebuyers. These loans are administered through the Federal Housing Administration and backed by the government, though you can apply for this loan type through a traditional lender. Depending on the amount of your down payment, you may be able to secure a FHA loan with a 500 minimum credit score requirement with a 10% down payment or a 580 credit score with a 3.5% down payment.
  • VA loans: VA loans are backed by the U.S. Department of Veterans Affairs but are issued by private lenders, like banks and mortgage companies. Traditionally, there is no minimum credit score requirement, however most lenders require at least a 620-credit score.

Your credit score requirement will depend on your financing so we highly recommend checking with your lender to determine the minimum credit score you need to qualify for a loan. It’s possible to buy a home with “bad credit” but since you can get a lower interest rate with a higher credit score, it’s worth taking the time to improve your credit before applying for a mortgage. Don’t let your credit score keep you from your dream home! Read our blog post on some simple ways to improve your credit score.

We’re excited to work with you to find your dream home. 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.

Tips for Saving for a Down Payment to Buy a New Home

Tips for Saving for a Down Payment 2Saving money is not always easy. And when you’re trying to save money for a down payment, the task may feel more difficult. But it doesn’t have to be! While buying a home requires a healthy amount of savings, it’s possible with some planning and focus.

Before you begin

Saving for a down payment can feel overwhelming. That’s why it’s important to know how much you need before you start saving, By knowing what your goal amount is, you’ll be able to create a savings plan that works for you. While most lenders look for a 20% down payment, you may be eligible for a lower down payment depending on your loan. Check with your lender for more details.

Now that you’ve determined your target down payment amount, let’s talk about some ways you can start saving for a down payment.

Set up automatic transfers

Use automation to your advantage! Set up automatic transfers from your checking account to a dedicated savings account for your down payment. This is the most popular and convenient way to save. Your bank will automatically transfer the funds at the frequency you set without additional work from you. There are several savings apps you can use to create automatic savings as well, like Digit or Acorns.

Wondering why should you set up a separate savings account from your current one? Easy: out of sight, out of mind. Using a separate savings account dedicated to your down payment will keep you from spending your earmarked cash. Another benefit: you can earn a bit of interest as you’re saving so find a bank offering a high interest rate on savings accounts.

Pay off other debt

Paying off other debt (credit card, personal, car or student loans, etc.) will mean you have more money available each month to save towards your down payment. Do whatever you can do to reduce your current debt so you can dedicate more resources to your down payment.

Lower your expenses

Take a look at your expenses and figure out what you can reduce or get rid of. Maybe instead of paying for cable, you can switch to a streaming service. Be careful here; choose one or two streaming services to use, otherwise you run the risk of having a bill that matches your cable bill.

Make lunch or coffee at home

The daily coffee or lunch habit can be costing you a lot.  You don’t have to skip these treats entirely! Maybe instead of eating out every day, consider bringing a lunch three or four days out of the week and eating out once or twice. Likewise, if you have a multiple cup a day coffee habit, try making your morning cup at home and treating yourself to a coffee out in the afternoon. Deposit the money you would have spent into your down payment savings account.

Shop smarter

Use some smart shopping strategies to help cut your grocery expenses. Avoid shopping on an empty stomach to keep impulse purchases to a minimum. Create and stick to your shopping list. Buy non-perishable items in bulk (just items you already use and love!). Choose the store brand instead of the national brands, and look for sales and coupons for items you use regularly.

Unsubscribe to mailing lists

Remove the temptation to shop by unsubscribing to marketing emails. These emails are designed to encourage you spend money with sales and special offers.

Sell stuff you don’t need or use

Chances are you have plenty of things in your home that aren’t being used. Instead of letting them take up space, put them to good use by selling them. You can use online marketplaces like Facebook Marketplace, OfferUp, Ebay or even Craigslist. Or you can host a yard sale. Bonus points: you’ll end up with less to pack up when it’s time to move!

Get a side hustle

Pick up a side job and dedicate every penny you earn towards your down payment fund. Depending on your skills, you can start doing freelance work or join the gig economy by driving for a car service, walking dogs, pet sitting, babysitting, or even tutoring.

Don’t look at saving for a down payment for your dream home as an impossible hurdle. By breaking it down into smaller, more manageable goals, you’ll feel like saving is achievable. You’ll be able to see the progress you’ve made and stay motivated to continue. If you’re serious about buying a new home, it’ll be worth temporarily passing up on expenses to fund this important goal.

Hayden Homes is here to help when you’re ready to buy a new home. We build new single-family homes in Idaho, Oregon, and Washington for every stage of life. Visit us on our website to learn more about our homes and new home communities. We’re looking forward to welcoming you into your new home.

5 Simple Ways to Improve Your Credit Score

Person using a calculator to review their finances for 5 Simple Ways to Improve Your Credit ScoreYour credit score is the key to your future home. It can be the difference between being approved or denied a mortgage. It can even determine your interest rate! Wondering how credit scores can affect home buying? Check out this post for more information.

Don’t let a poor credit score keep you from getting the home of your dreams. With some hard work, you can transform your credit score. Just remember, repairing your credit isn’t a quick fix; it can take three to six months before you start to see improvement. Here are five tips to improve your credit score.

Review Your Credit Report

Reviewing your credit report is the first step to improving your credit score. Knowing exactly where you stand financially will allow you to make the right decisions as you rebuild your credit. You can receive a free copy of your credit report from each of the three major credit bureaus. When you receive your credit report, make sure the information is accurate and report any incorrect information to the credit bureau to have it removed.

Pay Your Bills on Time

Your payment history is the most influential factor when determining your credit score. Paying your bills on time shows lenders that you’re responsible with credit and is a good indicator that you’ll continue to handle future debts responsibly as well. If you’ve missed payments in the past, get up to date on your payments and stay current.

Reduce Your Debt-to-Income Ratio

Your credit utilization, or the amount of debt you have compared to the amount of credit. Lenders use this ratio to determine if you will be able to make your payments each month. They typically like to see a ratio of 30% or lower.

To calculate your credit utilization ratio, take the total amount of credit used during the month and divide that by your total credit limit. For example, if you have a credit card with a $1,000 credit limit and you spend $300 during the month, your credit utilization ratio is 30%.

If your ratio is higher than 30%, it could indicate that you’re taking on more debt than you can afford. The most effective way to reduce your credit utilization ratio is to keep balances low on credit cards and other revolving credit like personal loans. Don’t just move money around; create a payment plan to pay down your debts.

Keep New Credit Applications to a Minimum

While you’re repairing your credit (or even applying for mortgages) limit the number of new credit applications you submit. Each new line of credit you apply for creates a hard inquiry on your report, which temporarily lowers your score.

Continue to Monitor Your Credit

Keep track of your hard work by continuing to monitor your credit. Don’t worry; you won’t hurt your score by checking your report! When you view your own credit report, it’s considered a “soft inquiry” and doesn’t affect your score.

It’s smart to regularly review your credit report so you can understand how well you’re managing your credit and if you need to make any adjustments. It will also allow you to spot and fix any inaccuracies.

Following these tips will help you establish a healthy relationship with credit and save you money in the long run. If you’re planning to purchase a new home this year, you’ll appreciate the hard work you put in to turn your credit score around.

Debt-to-Income Ratio: What is it and Why it Matters

Young couple discussing finances and debt-to-income ratioDebt-to-income ratio. If you’re in the process of applying for a home mortgage, you may have come across this term but do you understand what it means and how it can affect the loan application process? The debt-to-income ratio is how lenders evaluate your borrowing habits. Here’s what the debt-to-income ratio means and why it’s important.

What’s debt-to-income ratio?

Simply put, the debt-to-income ratio is the total of all your monthly debt payments divided by your gross monthly income; it’s expressed as a percentage). Lenders use this number (along with your credit history) to determine your ability to repay a loan.

Calculating your debt-to-income ratio is simple: add your monthly debt payments – this includes credit card payments, car, personal, or student loans, and housing expenses (i.e. rent or your current mortgage payment if applicable). Next, divide that number by your gross – or pretax – income. Finally, multiply the decimal number by 100 and you’ll end with your ratio percentage.

Why is my debt-to-income ratio important?

Lenders and banks use your ratio to determine your ability to pay back your debts. They use the understanding behind your debt load to determine what their lending limits will be.

What’s a good debt-to-income ratio?

While the maximum debt-to-income ratio varies by lender, the lower your debt-to-income ratio the better. In general, a ratio of 35% or less is ideal. A ratio of 36% to 49% is acceptable but could be improved as your debt load could potentially become unmanageable. A debt-to-income ratio 50% and above will make it difficult to qualify for a loan.

How do I improve my debt-to-income ratio?

Is your debt-to-income ratio a bit higher than 36%? Thankfully it’s possible to reduce it. Here are some options:

  • Increase your monthly debt payments. The extra payments will decrease your total debt.
  • Avoid taking on additional debt. Its time to prioritize your debt. If buying a new home is your priority, avoid taking on additional debts.
  • Postpone large purchase. Hold off on large-ticket items to save money so you don’t have to put the full amount on credit.

Take time to recalculate your debt-to-income ratio to see how your work is paying off. Watching your debt-to-income ratio decrease can be very motivating! Keeping your debt-to-income ratio low will help you qualify for a mortgage and keep your monthly payments low.

Ready to Buy a New Home?

Are you ready to buy a new home in Washington, Oregon, or Idaho? There’s a lot to navigate on the path to homeownership and we’re here to help. We invite you to reach out to us to learn more about your financing options.