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Buy A Home

Buy A Home

A new home is probably the largest purchase you’ll make in your life. As with any purchase, however, more information will often lead to greater satisfaction during and after the buy.

Our expert loan consultants are ready to help you understand your financing options and answer your questions about how much you can afford, the buying process and more. You can get started here by learning some basics about making financing decisions that work best for you now and in the future.

My First Home

There’s nothing like finding a first place to call your own. Our tools, checklists and expert guidance help you navigate the homebuying process, understand your options and keep the experience as stress-free as possible.

My Vacation Home

Are you ready to turn your dreams of a vacation or second home into reality? How can you make it happen? Turn to our team for support and guidance on the financing options that fit your particular situation.

My Next Home

Whether you’re upgrading, downsizing or moving across the country, your next home can open doors to a world of new opportunities. Let our Loan Consultant s show you what’s possible.

My Investment Property

If you’re considering an investment property – whether to flip, to rent or to add to your financial portfolio – we have a wealth of information to help you become knowledgeable about the mortgage process based on your circumstances.

My First Home

Is buying a home the right choice for you, is it financially realistic and, if so, what steps will you need to take?

Your Home Ownership Guide Is Here

Buying your first home is a life-changing decision and significant investment. You may have questions about the overall process or the best place to start. You may wonder how long it will take or what paperwork you’ll need to provide. We’re here to make the experience more manageable and help you become an informed borrower.

Discover What's Next

You’ll find the tools, checklists and support – online or in person – to help you determine what you can afford, learn how to get pre-approved and better understand the financing process.

Make informed decisions at every step to arrive at the outcome that's right for you.

Let's Get Started

The Home Buying Process

Shopping for your first home can be exciting – but finding the right financing can be daunting. With PHH Mortgage, it doesn't have to be. We’ll help you understand and navigate the homebuying process, from start to finish.

If you're ready to consider buying a new home, we're ready to help you make decisions, find the financing that fits your unique situation and show you how you might get an edge over other buyers.

This overview takes you through the homebuying and mortgage experience so you know what’s to come. For a more detailed explanation, call an experienced PHH Mortgage loan consultant at (800) 210-8849. We can answer any questions you have, every step of the way.

Determine What You Can Afford

Knowing what you can afford is an important first step on your road to home ownership. Key costs to consider are:

  • The down payment: This is the part of the property purchase price paid in cash and not financed with a mortgage. The larger your down payment, the lower your monthly mortgage payments.
  • Closing costs: Due at closing, these cover expenses that complete the transfer of ownership – such as an origination fee, attorney's fee, initial escrow payments and the costs of obtaining title insurance and a survey. Closing costs are typically based on the home price and vary according to location.
  • Monthly payments: These are based on both the principal (the amount of the loan) and interest (the amount you pay to borrow money, calculated as a percentage of the amount borrowed). They may also include money held in escrow for taxes, homeowners’ insurance and mortgage insurance.
  • Additional expenses: Utilities, insurance and homeowners’ association dues, and property management fees are other costs to consider in your budget.

These expenses may vary, depending on the loan options you choose. An affordability calculator may help you determine the amount you can afford – and feel comfortable spending.

Once you have an idea of what you can afford, speak with one of our loan consultants who will help you find a financing option that’s right for you. Call (800) 210-8849.

Get a Pre-Approval Decision

Obtaining a loan is typically a big part of the experience for first-time homebuyers – but the process can require high credit scores and a lot of documentation. It's best to obtain a pre-approval decision before you start house hunting, as it will allow you to search with the confidence of knowing the amount you can borrow.

What to Expect

A pre-approval decision can make your homebuying experience easier. A pre-approval is a preliminary evaluation of your financial status that does not include a commitment to giving you a loan. If you receive a loan pre-approval decision, we'll fax or email a letter with your loan amount so you can start house hunting right away. In fact, many real estate agents will ask you to get a pre-approval letter first so they can show you homes that suit your budget. With the letter to back up your bids, you can stay focused on finding your first home.

We're at your service and available to answer any questions. Contact us at (800) 210-8849 to receive a pre-approval decision in as little as one business day. 1 Submitting complete, accurate and legible documentation helps to speed the process – and we can help keep you on track. Once you receive your pre-approval decision, you can check the status of your loan anytime at www.mortgageloanstatus.com.

Explore Your Options

Once you find the home you want, your real estate agent can provide you with a list of comparable homes (known as “comps”) recently sold in the area. Comps help you determine how much to offer, but before you decide on the amount, consider such important factors as how much you can afford, the condition of the home, the competitiveness of the local marketplace, inspections and more.

Any offer you make could become legally binding, so we strongly recommend consulting with your real estate agent before committing.

Finalize the Home Inspection and Loan Commitment

Make sure your offer contains provisions for an inspection by an accredited home inspector and outlines actions to address any issues that may arise. The inspection should cover interior and exterior structural elements, as well as heating/cooling, electrical and plumbing systems. It is strongly recommended that you be present during the inspection so you can use it as a time to ask questions and learn about the property.

The loan commitment takes place once the loan and the property are approved. These steps include appraising the home to make sure it meets certain guidelines and conducting a title search to ensure there are no outstanding liens on the property.

Close on the Property

At the closing, you and the seller transfer funds and sign all applicable paperwork to finalize the transaction. Real estate agents, closing agents, attorneys and mortgage and title representatives may also be present.

Our loan consultant will help you prepare for closing, which includes providing you with an estimate of any fees due at the closing.

Once all parties sign the papers and fees are paid, you'll get the keys to your new home.

Get Started Now

PHH Mortgage will help you on your way home, every step of the way. For a more in-depth explanation of your options, call (800) 210-8849 or start the application process online.

1 This is not a commitment to lend. All pre-approval requests or applications are subject to complete underwriting review.

Benefits for First-Time Homebuyers

Your career, your first car, marriage and children: Whatever you view as key life milestones, buying your first home certainly qualifies as one. Buying can be a sound financial decision, and we can help you get on track to start experiencing the benefits of home ownership.

Control Your Comfort

Landlord disputes, rising rental fees, canceled leases or unfavorable living situations can make renting a hassle. Buying your own home puts you in control, allowing you to customize your personal living space.

First-time homebuyers enjoy the luxury of identifying their needs and filling their home with what they want. From interior décor to exterior paint, you choose what goes into – and onto – your home.

Find Your Place Among Friends

Buying a home isn’t just about location – it’s about people, too. Shopping for your first home is the ideal time to identify the community you would like to be a part of and join. Entering into a community you enjoy offers long-term benefits for you and your loved ones.

Leverage Your Assets for the Future

Owning a home increases your assets, which can open up opportunities for other investments. Once you’re a homeowner, you may be able to use your home’s equity as a secure line of credit for future purchases. Credit is vital to acquiring new purchases, such as a car or vacation home, and meeting your mortgage payments on time is one of the best ways to build good credit. Improving your credit also puts you in position for lower interest rates on future loans – which means your home investment can pay off, now and in the future.

Financial benefits vary by state and market conditions, so check with your real estate agent and accountant for details.

Tax Benefits

The benefits of homebuying abound – and they can add up come tax time. You may be able to deduct your mortgage interest, real estate property taxes, discount points or other items. Consult with your tax advisor for details specific to your individual situation.

Careful Considerations

You have many decisions ahead before you buy your next home. Many of them have to do with where you’re living right now. Here are some factors to consider as you build a financing strategy that will best meet your goals.

Decide Who Will Sell Your Current Home

Unless you choose to sell your house on your own – known as “For Sale by Owner” or FSBO – you should work with a licensed real estate agent to help bring your house to market. Agents usually collect a commission of approximately 6% of the sales price for marketing your property, arranging showings, fielding offers, representing you at the closing and handling all the paperwork.

If you decide to work with an agent, ask friends and family members for referrals. Interview several agents to find one with whom you feel comfortable, and ask their advice about what they would change or highlight about your home. Also be sure to inquire about their experience, particularly in your neighborhood.

Get Your Home Market-Ready

Consider getting a pre-inspection to prepare your house for sale. Although your home will be inspected before closing, a pre-inspection can alert you to repairs or issues you need to address before your home goes on the market. You can then shop around for contractors to make the repairs and present a better product, which is especially important in a crowded housing market.

Even if you don’t opt for a pre-inspection, you can increase the appeal of your home with a few simple and relatively inexpensive touches, such as:

  • Applying fresh coats of paint, inside and out
  • Pressure washing entryways
  • Adding new mulch and landscaping updates

Know Your Home's Value

If you use a real estate agent, he or she can provide you with a list of comparable homes (or “comps”) recently sold in the area. Comps help you determine the right price at which to list your home. There are other factors to consider, including the condition of your home, the cost of any outstanding repairs and your timeline for wanting to get your home on – and off – the market.

If you’re selling your home yourself, you can use Internet resources and local newspapers to build your own comps.

A common temptation is to overprice your home in the hope of negotiating with potential buyers. But setting your price too high may discourage buyers from looking at your home at all.

My Next Home

Life can bring many changes. When those changes involve moving to a new home – whether down the street or across the country – we can help you understand your financing options and find the one that makes the most sense for you.

New Questions for a New Home

Some of what you learned when you bought your current home still applies, but the mortgage process has likely changed since your last home purchase – even if it was only five to ten years ago. And there are new questions to consider this time around, including:

  • How much are you likely to receive for your current home?
  • If you still have your first mortgage, what happens if you need to pay a second?
  • Will you need to invest in fixing up your current home before selling it?
  • What’s involved with selling and buying a home at the same time?
  • What are your financing options for your new home?

What Are You Seeking?

The answers to these questions will impact your financing choices:

  • Are you looking to downsize or upgrade your space?
  • Are you looking for something similar, but in a different location?
  • Is the market in your new area similar to the one you’re currently in?

PHH Mortgage has the tools to help you find answers – and our loan consultants are here to help you every step of the way. Call us anytime at (800) 210-8849.

Find Out More

Buying Process For Next Home

Shopping for your next home can be exciting – but finding the right financing option may seem overwhelming. With PHH Mortgage, it doesn't have to be.

We’ll help you find the financing that fits your situation – and maybe even get an edge over other buyers. Our experienced loan consultants will answer your questions every step of the way. It all starts with a call to (800) 210-8849.

This overview gives you a good idea about what’s involved in buying your next home. You may be familiar with some of these terms and steps from buying your current home.

Determine What You Can Afford

Some of the key costs to consider when buying your next home include:

  • The down payment: This is the part of your home purchase price you’ll pay in cash and will not finance with a mortgage. The larger your down payment is, the lower your monthly mortgage payments can be. Some make a larger down payment on their next home by using the money they make on the sale of their current home.
  • Closing costs: Due at closing, these cover expenses that complete the transfer of ownership – such as an origination fee, attorney's fee, initial escrow payments and the costs of obtaining title insurance and a survey. Closing costs are typically based on the home price and vary according to location.
  • Monthly payments: The amount you pay each month for your next home is based on both the principal (the amount of the loan) and the interest (the amount you pay to borrow money, calculated as a percentage of the amount borrowed). Monthly payments may also include money held in escrow for taxes, homeowners’ insurance and mortgage insurance.

Talk with one of our loan consultants who can help you figure out how much you are comfortable spending and find a financing option that's right for you. Call (800) 210-8849.

Get a Pre-Approval Decision

If you're thinking of selling your home and buying a new one, getting a loan pre-approval decision can make the experience faster and easier from start to finish.

Pre-approval is a preliminary evaluation of your financial status that does not include a commitment to giving you a loan. It's best to obtain a pre-approval decision before you start house hunting, as it will allow you to search with the confidence of knowing the amount you can borrow. In fact, many real estate agents will ask you to get a pre-approval decision first so they can show you homes that suit your budget.

Take a few minutes to call us at (800) 210-8849 for your loan pre-approval decision.

Know What to Expect

Your pre-approval decision application is based on your ability to repay a loan or line of credit. Evaluators will typically consider your income, current debts, credit history, assets and available funds. You will also learn what documentation you’ll need at the time of your mortgage application.

Evaluation criteria for a pre-approval include both your debt-to-income and housing-to-income ratios. Your debt-to-income ratio is based on total monthly debt payments, while your housing-to-income ratio reflects the total amount you spend each month on housing.

You can also contact us to receive a pre-approval decision in as little as one business day. 1 Submitting complete, accurate and legible documentation helps to speed the process – and we can help keep you on track. Once you're pre-approved, you can check the status of your loan anytime at www.mortgageloanstatus.com.

Explore Your Options

Once you find your perfect next home, your real estate agent can show you a list of comparable homes (known as "comps") recently sold in the area. You can use these comps to help figure out the right price to offer. Of course, there are other factors to consider, such as the condition of the home and any needed repairs. Search for homes online to get a good idea of what’s available in your price range and desired location.

You could be legally bound by any offer you make, so we strongly suggest carefully thinking through all the details and consulting with your real estate agent beforehand.

Finalize the Home Inspection and Loan Commitment

Your offer should contain provisions for a home inspection by an accredited home inspector and an outline of actions the seller needs to take in case there are problems. The inspection should cover heating/cooling, electrical and plumbing systems, as well as interior and exterior structural elements. It is recommended that you be there during the inspection so you can ask questions and learn about the property.

The loan commitment takes place once we approve the loan, appraise the home to make sure it meets our guidelines and conduct a title search to ensure there are no outstanding liens.

Close on the Property

At settlement, or the closing, you and the seller will transfer funds and sign all necessary paperwork to complete the deal. Closing agents, real estate agents, attorneys and mortgage and title representatives may also be present. Our loan consultant will help you prepare for the closing and will provide you with an estimate of any fees.

Get Started Now

Getting the right kind of financing is a critical step in the process of buying your next home. PHH Mortgage can help you navigate the details and requirements. Call an experienced loan consultant at (800) 210-8849 or begin the application process online.

1 This is not a commitment to lend. All pre-approval requests or applications are subject to complete underwriting review.

Benefits of Repeat Home Ownership

Buying a new home can open a whole new chapter of your life. It can give you the chance to either downsize or "upsize," depending on your space needs, as well as an opportunity to use what you learned from your existing or previous house to make your next one everything you ever wanted. Most of all, you can put all of your homebuying knowledge to work for you to make the process easier – but don’t forget to familiarize yourself with things that might have changed since you bought your first home.

You Know What’s Coming – and What You Want

You already understand how financing works, the basics of taxes and insurance, and the costs involved with owning a home. You also have a better idea of what you want – which means you may be pickier about certain things like upgrades, location and the extent of DIY projects you’re willing to do.

For these reasons, house hunting may take longer – but the loan experience doesn’t have to. PHH Mortgage will help you create a strategy that works for your situation, starting with a loan pre-approval decision. Call an experienced loan consultant at (800) 210-8849 to find the right financing option for you.

Careful Considerations

You have many decisions ahead before you buy your next home. Many of them have to do with where you’re living right now. Here are some factors to consider as you build a financing strategy that will best meet your goals.

Decide Who Will Sell Your Current Home

Unless you choose to sell your house on your own – known as “For Sale by Owner” or FSBO – you should work with a licensed real estate agent to help bring your house to market. Agents usually collect a commission of approximately 6% of the sales price for marketing your property, arranging showings, fielding offers, representing you at the closing and handling all the paperwork.

If you decide to work with an agent, ask friends and family members for referrals. Interview several agents to find one with whom you feel comfortable, and ask their advice about what they would change or highlight about your home. Also be sure to inquire about their experience, particularly in your neighborhood.

Get Your Home Market-Ready

Consider getting a pre-inspection to prepare your house for sale. Although your home will be inspected before closing, a pre-inspection can alert you to repairs or issues you need to address before your home goes on the market. You can then shop around for contractors to make the repairs and present a better product, which is especially important in a crowded housing market.

Even if you don’t opt for a pre-inspection, you can increase the appeal of your home with a few simple and relatively inexpensive touches, such as:

  • Applying fresh coats of paint, inside and out
  • Pressure washing entryways
  • Adding new mulch and landscaping updates

Know Your Home's Value

If you use a real estate agent, he or she can provide you with a list of comparable homes (or “comps”) recently sold in the area. Comps help you determine the right price at which to list your home. There are other factors to consider, including the condition of your home, the cost of any outstanding repairs and your timeline for wanting to get your home on – and off – the market.

If you’re selling your home yourself, you can use Internet resources and local newspapers to build your own comps.

A common temptation is to overprice your home in the hope of negotiating with potential buyers. But setting your price too high may discourage buyers from looking at your home at all.

My Vacation Home

You’ve always wanted to buy that mountain cabin, seaside cottage or downtown condo that you can use to get away from it all – and now is the time. Buying a vacation home is both similar to and different from purchasing your primary residence, and it is important to understand both – and your goals – before taking that step.

More Than Just a Place to Stay

Will your new purchase be a vacation retreat for you and your family, or do you have bigger plans for the property? Some reasons for buying include:

  • Rental potential: Many buyers rent out their vacation properties and use the income to offset the mortgage, maintenance and other expenses. It is important to note that if you rent it out, it is considered an investment property and subject to a higher interest rate loan.
  • Tax benefits: Rental properties can yield tax advantages, particularly in the areas of depreciation and resale. Consult with your tax advisor to learn which ones might apply to you.
  • Equity: Vacation homes in locations growing in popularity can be attractive long-term investments.


Find Out More

Vacation Home Buying Process

Shopping for a vacation home can be exciting, but finding the right financing option can seem intimidating. With PHH Mortgage, it doesn't have to be.

We’ll help you understand the vacation home buying process, help you find a financing option that fits your particular situation and answer your questions every step of the way. It all starts with a call to (800) 210-8849.

This overview walks through what’s involved in buying a vacation home, so you’ll have a good sense of what’s to come before you jump in.

Determine What You Can Afford

This is an important first step in the decision process. Key costs to consider are:

  • The down payment: Just as with a primary residence, this is the part of the property purchase price paid in cash and not financed with a mortgage. The larger your down payment, the lower your monthly mortgage payments – and be prepared that you may be required to contribute a higher down payment for a second home.   
  • Closing costs: As with a primary residence, these costs are due at closing and complete the transfer of ownership. They include the loan origination fee, attorneys’ fees, initial escrow payments and the costs of obtaining title insurance and a survey. Closing costs are typically based on the home price and will vary according to the location of your vacation property.
  • Monthly payments: Similar to a primary residence, monthly payments for a vacation home are based on both the principal (the amount of the loan) and the interest (the amount you pay to borrow money, calculated as a percentage of the amount borrowed). These payments may also include money to be held in escrow for taxes, homeowners’ insurance and mortgage insurance.
  • Additional expenses: Utilities, insurance, cleaning services, homeowner association dues, property management fees – these are also costs to consider at this stage, especially if you’re considering using the home as a rental property.

Talk to one of our loan consultants who will help you find the financing option that fits your particular situation. Call (800) 210-8849.

Get a Pre-Approval Decision

Take a few minutes to call us for a loan pre-approval decision before you start looking for properties. Knowing the amount you can borrow can help you feel more confident going into your search.

If you do receive a loan pre-approval decision, the process will result in a letter that you can take to your real estate agent to facilitate the buying process. In fact, most real estate agents will ask you to have a pre-approval letter in hand with the loan amount indicated before they show you homes.

Know What to Expect

When purchasing a vacation home, it’s important to consider the impact of financing the purchase. If you are still financing your primary home, you must be prepared to simultaneously have and manage two mortgages. Remember that the vacation home will differ – loans for vacation homes typically require a larger down payment and are subject to higher interest rates than loans for a primary residence.

Evaluation criteria for a vacation home include your debt-to-income and housing-to-income ratios. Your debt-to-income ratio is based on your total monthly debt payments, including your mortgage payments on a primary residence, and how much you earn. It’s important to know your debt-to-income ratio going in, as it is expected to be below 36% to obtain a second home. The housing-to-income ratio reflects the total amount you spend each month on housing, including mortgage payments on a primary residence. 

Explore Your Options

Once you find the vacation home you want, your real estate agent can provide you with a list of comparable homes (known as “comps”) recently sold in the area. Comps help you determine the right price to offer. As with the purchase of a primary residence, there are important factors to consider, such as the condition of the vacation home, the cost of any necessary repairs, the competitiveness of the market in that area and more.

Vacation property decisions also carry other considerations, including access, the surrounding tourism region and rental income potential. Search for properties online to get an idea of the homes available in your price range.

Remember: any offer you make could become legally binding, so we strongly recommend carefully thinking through the details and consulting with your real estate agent.

Finalize the Home Inspection and Loan Commitment

As with a primary residence, your offer for a vacation home should contain provisions for a home inspection by an accredited home inspector and an outline of actions to be taken if problems arise. The inspection should cover interior and exterior structural elements as well as heating/cooling, electrical and plumbing systems. Even if an out-of-town trip is involved, it's a good idea to be present during the inspection so you can ask questions about the property.

The loan commitment takes place once we approve the loan and receive an acceptable appraisal and title search that meet our guidelines.

Close on the Property

You’ve done your research, asked informed questions and evaluated your options – and you’ve found a vacation home and financing option that work for you. Now it’s time to close the deal.

At the closing, you and the seller transfer funds and sign all applicable paperwork to finalize the transaction. Real estate agents, closing agents, attorneys, and mortgage and title representatives may also be present. Our loan consultant will help you prepare for closing, including providing you with an estimate of any closing fees.

Once the papers are signed and fees are paid, you'll get the keys to your new vacation home.

Get Started Now

Obtaining financing is a critical step in the vacation home buying process. The purchase of a vacation home often requires higher credit scores and more documentation than for a primary residence – especially in the current market.

PHH Mortgage can help you navigate the details and requirements. Ready to get started? Call an experienced PHH Mortgage loan consultant at (800) 210-8849 or begin the application process online.

1 This is not a commitment to lend. All pre-approval requests or applications are subject to complete underwriting review.

Benefits of Vacation Home Ownership

You’re enticed by the advantages of a vacation home: a place to stay without the hotel hassle, a travel destination to make your own, a retreat where you and your family can make memories. But there are several other benefits you may not have considered.

Rental Income

Chances are you or your family won’t be able to spend every day of the year at your vacation home. Many vacation home owners take advantage of these vacant periods by renting out their properties – particularly if the home is located in a popular destination. Rental income can offset – either partially or fully – the costs of your mortgage, as well as expenses like utilities, maintenance costs and homeowner association fees. It can even provide additional income.

Tax Benefits

Whether or not you rent out your vacation home, it may provide you with potential tax benefits. The way you divide the time between personal use and rental use of your vacation home will typically determine the extent of applicable tax benefits while you own the property. And when you sell the property, you may also be eligible for tax benefits. Consult with your tax advisor for details specific to your individual situation.

Additional Equity

If a vacation home is in a growing community or increasingly popular area, it may be a sound long-term asset to add to your investment portfolio.

Careful Considerations

As with any real estate investment, the purchase of a vacation home is a big decision. It’s a residence you and your family will visit for years, as well as an investment with the potential to generate – or cost – a substantial amount of money. To make the choice that’s right for you, here are some factors to consider before committing.

Location

A vacation property is a much bigger commitment than a hotel room or a timeshare. You’ll be making repeat visits, investing lots of money and possibly relying on the property for rental income. Location plays a big role in all of these factors. To decide if it’s a good fit:

  • Spend time there: Will the scenery you love now be what you’ll want to visit six months or six years from now? Will the property be able to evolve with your family’s interests and needs? Make sure by paying a visit – many, if possible – before buying.
  • Consider the surroundings: Just as with a primary real estate investment, your satisfaction with your vacation home will be affected by factors such as walkability, demographics and even crime rates. If you’re considering the property for rental income, also research tourism factors. Is the area booming or in decline? Are there busy tourist periods that might conflict with your vacation or rental plans?
  • Evaluate access: How far is the property from the nearest airport or major city? How accessible are the roads leading to it? Does traffic during the busy season come to a standstill outside your door? If a property is difficult to get to, chances are you – or renters – won’t visit very often.

Finances

Compare owning versus renting: Is owning a property in your favorite destination truly less expensive than a regular hotel room rental or timeshare? To find out, analyze your expenses in the area over the past several years and do some research on what these expenses might look like in the years ahead.

Calculate the complications: Buying a vacation home can involve meeting different lending requirements from those of a primary home. You may need to make a larger down payment or pay a higher interest rate – and vacation homes have distinct tax reporting requirements as well. Plus, it’s possible you may be financing with a home equity loan rather than a mortgage. Make sure you’re comfortable with these and other financial factors.

Check against your budget: As you would with any sizable financial investment, consider how periodic and occasional expenses, such as mortgage insurance, property management and maintenance, will impact your budget and cash flow.

Daily Life

Make time for ownership: You may need to travel to the location more often during the selection and buying process and be present at the inspection and closing. A vacation home can take up your time and resources into the future as well. Have you anticipated the regular trips to check in on the property, or the phone calls, emails and other details involved in dealing with renters?

Assign caretaking responsibilities: A vacation home requires ongoing maintenance, repairs and periodic home improvements, and needs a caretaker when it’s unoccupied. Will you be handling this yourself or delegating these tasks to a property manager?

Decide who’ll act as rental agent: Are you comfortable handling rental duties yourself, or would you work with an agency? This can make a big difference in your day-to-day life and in your expenses.

My Investment Property

An investment property can be at the center of an income growth strategy, part of a retirement plan or used as a way to diversify a portfolio. The methods and reasons for investing in property are as varied as the properties themselves – and their investors. Some see being a landlord as a part-time or full-time job; others invest and sell one property at a time. But two elements are common to any kind of investment: you are seeking a return, and nothing is certain except potential risk.

Whether you’re interested in entering the investment property arena and need information or you’re comfortable with real estate investment and are seeking to fine-tune your strategy, you’ll find information here to help you.

What Type of Investment Fits Your Needs?

There are many ways to structure your property investment, but most involve one of two basic strategies:

  • Buy to hold: In this scenario, you will be the landlord or you’re planning to live in the property yourself at a later date and will rent it in the meantime.
  • Buy to sell: “Flipping” – or buying an investment property to sell it at a higher price – has become a popular term, but investors have been doing so with more or less success for longer than the term has been in wide use.
 

Find Out More

Investment Buying Process

Entering the investment property market involves creating a strategy, and financing is a vital factor in that strategy. PHH Mortgage can help make the financing process understandable.

Your situation and investment plan are unique, so we help you find a financing option that fits your needs. Investors usually have lots of questions, and our experienced loan consultants are ready to answer. Just call (800) 210-8849.

As you consider your investment purchase, this overview can help you get an idea of the process, some benefits and considerations, and options.

Work Out Your Investment Plan

There are many places for you to put your money – and all carry some risk and potential reward. As an investor, you have a certain amount of funds, and you’re looking for a particular return on investment (ROI) over a particular span of time. Additionally, you look at many of the same factors as a primary homeowner would – but many more are added and the priorities are shifted.

You’re examining questions of risk, weighing tax benefits and drawbacks, looking at income fluctuations over the years and considering multiple other financial questions as much as you’re examining the merits of a particular home.

Property investors and financial advisors recommend starting with an overall investment plan, then determining whether a property fits within it – rather than finding a property first and then trying to fit it into a plan. For instance, part of your investment plan might be to create a strategy for when to add more investment properties to your portfolio, when to sell or when to convert a rental property to a sale one.

In short, it’s about the investment – not the property.

Examine Costs and Payment Factors

Investment properties have unique requirements – be ready with funds for a down payment and closing costs.

  • Cash payments: Paying in cash will not only depend on whether you have the cash on-hand, but how it might affect your tax situation, cash flow or other investments. Weigh this choice against your overall investment plan.
  • Down payment: Mortgage insurance is not available on investment properties. You’ll need a minimum 20 percent down payment. The remainder can often be financed, but contact us to find out what types of properties are eligible for financing. Interest rates can be higher for investment property purchases than for primary residence purchases. The larger your down payment, the lower your monthly mortgage payments will be.
  • Closing costs: These costs complete the transfer of ownership and include the loan origination fee, attorneys’ fees, initial escrow payments and the costs of obtaining title insurance and a survey. Closing costs are usually based on the property’s price and will vary according to the location of your investment property.
  • Monthly payments: Payments are based on both the principal (the amount of the loan) and the interest (the amount you pay to borrow money, calculated as a percentage of the amount borrowed). Money may be held in escrow for taxes and insurance. You may choose to pay more on the principal as part of your investment plan or for tax reasons.

Additional Expenses on Investment Properties

Expenses can add up fast, particularly if you’re using your investment property as a source of rental income. Here are a few of the costs to consider:         

  • Water/sewer
  • Garbage
  • Utilities
  • Legal fees
  • Accounting
  • Evictions
  • Vacancies
  • Office supplies
  • Fuel
  • Scheduled maintenance
  • Capital improvements

Preparation and Timing Matter

Timing is a major consideration when it comes to investment properties. As you weigh your decisions against your overall investment plan, you’ll be determining not just what property you want to buy, but when to buy, how long you want to hold onto it and what kind of time span you seek for ROI. Knowing your credit history and borrowing power is critical before getting started. Having tools and information in place will help you make your move at the time that’s right for you.

Just as you would for a primary home purchase, you’ll need to determine the amount you’re comfortable spending. An affordability calculator can help you get the right figures. After that, talk to one of our loan consultants to ensure the property type is eligible for a mortgage and find a financing option that's right for you.

Get a Pre-Approval Decision

Approval requirements can be different when you are buying an investment property. Take a few minutes to call us for a loan pre-approval decision, so you’ll know the amount you can borrow and can feel more assured as you start your investment property search. In fact, most real estate agents will ask you to have a pre-approval letter in hand with the loan amount indicated before they show you homes.

Another timesaver: You may have a lot of documents to shuffle with your investment purchase. Having complete, accurate and legible documentation facilitates speedy processing – and we can help you stay on track. You can also contact us to receive a pre-approval decision in as little as one business day.Once you're pre-approved, you can check your loan status anytime at www.mortgageloanstatus.com.

Determine the Worth of Your Investment

Getting a sense of the value of a potential investment property starts as it does with any real estate purchase: by obtaining a list of comparable homes (known as “comps”) recently sold in the area. Your real estate agent can assist with this and will help you determine the right offering price, as well as gain insight into how your investment may change over the years.

A good way to get an idea of the properties available in your price range is to search online. If you’re planning to use mortgage financing, make sure it’s not an excluded type of property – and if you’re investing in a property for rental, research online for changes in demand, rental rates and conditions of properties nearby. Examine if leases are long-term or if there is fast turnover, the conditions that local advertisements offer on rentals and even the overall population and job growth.

Remember that any offer you make could become legally binding, so we strongly recommend thinking carefully through the details and consulting with your real estate agent and financial advisor beforehand.

Inspection and Loan Commitment Stages

Make sure that your offer includes a home inspection by an accredited home inspector and an outline of actions to be taken if problems arise. The inspection should cover interior and exterior structural elements, as well as heating/cooling, electrical and plumbing systems. It’s a good idea to be involved in the inspection, even if it means traveling, to keep an eye on your investment and ask questions about the property.

The loan commitment takes place once we approve the loan and receive an acceptable appraisal and title search that meet our guidelines.

Timing Matters

The sooner the deal closes, the sooner you can realize potential return.

At the closing, you and the seller transfer funds and sign all applicable paperwork to finalize the transaction. Real estate agents, closing agents, attorneys, and mortgage and title representatives may all be present at the closing.

Our loan consultant will help you prepare for closing and will provide you with an estimate of any closing fees.

Preparation Puts You Ahead

Buying an investment property can require specialized information and different documentation. Even if you’ve bought investment properties in the past, market conditions are subject to change that may, in turn, impose different requirements.

At PHH Mortgage, we’re prepared to help you navigate the details and requirements. Ready to get started? Call an experienced PHH Mortgage loan consultant at (800) 210-8849 or begin the application process online.

1 This is not a commitment to lend. All pre-approval requests or applications are subject to complete underwriting review.

Investment Benefits

An investment property has the potential to become a tangible source of income over the years – but the benefits go beyond basic rentals or re-sales.

Maximized Rental Opportunities

If your investment property is close to local businesses, in a popular commuter town, near a transportation hub, convenient to local employers or features access to popular amenities, you could see a good cash flow from renting. Rental income can offset – either partially or fully – the costs of your mortgage, as well as expenses like utilities, maintenance costs and homeowner association fees. Your goal as an investor is to have income on top of these offsets.

Possible Tax Benefits

Tax benefits on investment properties can include mortgage interest and property tax deductions. In addition, depreciation options may provide tax benefits. Consult with your tax advisor to learn which ones might apply to you.  

Careful Considerations

When buying an investment property, you’ll have many of the same considerations that you’d have with a home purchase – plus many additional factors.

Your Investment Plan

  • Think long term: An investment property can be part of an investment plan that spans decades. Tenant damage, a vacant property, a poor market or legal issues can all add risk to your investment. It is not uncommon to plan for the full lifespan of the investment, including an exit strategy. What will you do with the property in a few years? Do you have a plan B and plan C – for instance, rent instead of sell if the market isn’t where you want it to be?
  • Examine risk: The type of property you choose depends on your tolerance for risk. Any investment is a risk, but different types of investments present different degrees of uncertainty. How comfortable are you with a fixer-upper or an unfamiliar neighborhood? How long can you wait to realize ROI? You may want to explore these questions on your own or with an advisor.

Location

Examine location with an eye toward what will make a good investment, either for a steady stream of reliable renters or for a good resale. Here are some factors to consider:

  • Consider the surroundings: Just as with a primary real estate investment, your satisfaction with your investment property will be affected by such factors as walkability, demographics and even crime rates. If you’re considering the property for rental income, you should also research tourism factors. Is the area booming or in decline? Are there busy tourist periods that might conflict with your vacation or rental plans?
  • Research the rental market: In addition to the basic strategies of visiting the property at different times of day, getting to know the neighborhood and looking at comps, you’ll also want to research local vacancy rates. This gives you a better understanding of risk and helps you plan for possible vacancies or time on the market.

Finances

Other considerations with investment properties involve how you structure financing. Here are some scenarios:

  • Look at fixed rate advantages: A fixed rate mortgage, with its steady monthly payment amount, may be a good choice for buyers who plan to own and rent their investment property over a long duration. It may also be good for investment buyers on fixed incomes. Finally, predictable payments can make your risk and return projections easier to calculate.
  • Check your amortization terms: If you choose a fixed rate mortgage, the amortization terms have great importance because the duration of payments will affect your overall investment plan. A short-term loan may work well for investors who plan to sell within a few years, while a long-term loan may be good for an investor buying for a long-term rental.

Extra Expenses

  • Have cash on hand: Buying an investment property can involve meeting different lending requirements than those of a primary home. You may need a larger down payment or pay a higher interest rate. Some costs may not carry tax benefits and may need to be paid soon. Make sure you’re comfortable with these and other financial factors.
  • Factor property management costs: You may need to travel to the location more often during the selection and buying process – for instance, to be present during the inspection and closing. An investment property can take up your time and resources into the future as well. Have you anticipated the regular trips to check in on the property, or the phone calls, emails and other details involved in dealing with renters? What about homeowner association dues, utilities, office supplies and more?
  • Decide who’ll act as rental agent: Are you comfortable handling rental duties yourself, or would you work with an agency? This can make a big difference in your day-to-day life and your expenses.

Home Buyer Checklist

Buying a home should be an exciting time in your life. We’ve prepared this checklist of what’s involved to help you enjoy it and get you more comfortable with the entire experience.

For more information, or to get your homebuying process started by applying for a loan pre-approval decision, call an experienced PHH Mortgage loan consultant at (800) 210-8849.

    ✓    Analyze the decision
    ✓    Determine how much you can afford
    ✓    Organize your personal information
    ✓    Apply for a pre-approval decision
    ✓    Find a licensed real estate agent
    ✓    Search for a home and research areas of interest
    ✓    Visit selected homes
    ✓    Make an offer on the home you want
    ✓    Arrange financing
    ✓    Schedule a home inspection
    ✓    Prepare for closing

Analyze the decision

  • Consider the recurring expenses involved, including taxes, homeowners’ insurance, private mortgage insurance (PMI) and utilities.
  • Consider the responsibilities of home ownership, including routine maintenance, both inside and outside of the house.
  • If you are an existing homeowner, consider any costs involved with selling your current home, including costs to make repairs.

Determine how much you can afford

  • Consider all one-time costs involved with purchasing a new home, including such up-front costs as the down payment (which can be larger with some mortgage products) and closing costs.
  • Estimate the monthly mortgage payment.
  • Include in your estimates other costs, such as taxes and maintenance, insurance and any applicable association fees.

For help determining how much you can afford, call an experienced PHH Mortgage loan consultant at (800) 210-8849.

Organize your personal information

  • Check your credit report for any errors in need of correction.
  • Gather documents, such as financial statements and tax forms.
  • Pull together other documents, including:
    • names, addresses and Social Security numbers of all applicants,
    • contact information for your current landlord or your current mortgage company,
    • a HUD-1 settlement statement on the property you are selling, if applicable,
    • pay stubs and current employer information,
    • the value of your assets and
    • the source of your down payment and closing costs.

Apply for a pre-approval decision

  • The pre-approval process will help determine how much home you can afford. Additionally, it demonstrates to sellers that you're a qualified buyer and gives you the confidence to negotiate and even make an offer.
  • Apply for a loan pre-approval decision by calling (800) 210-8849, or get started online. Our experienced loan consultants may be able to give you a pre-approval decision in as little as one business day. 1

Find a licensed real estate agent

  • Real estate agents specialize in a variety of areas, so be sure to choose one who you feel best aligns with your personal goals and needs.
  • An agent who knows a specific area well and has longtime local ties may be able to share knowledge you can use.
  • If you have rented over the years and had a good experience with the rental agency, this might be a good first place to look for your real estate agent.

Search for a home and research areas of interest

  • Research properties online to get an idea of the homes available within your price range.
  • Walk or drive around areas that interest you to get a feel for different neighborhoods. Many sellers post physical “for sale” signs, so it can be valuable to keep an eye out on your tour.
  • Visit your preferred neighborhoods at different times of the day and on different days of the week to observe patterns of noise and traffic.
  • Research online and talk to your real estate agent for information on neighborhoods, crime rates, schools and other demographic information important in your search for a home.
  • Follow the local news to learn about new developments and emerging community issues that could affect your purchase or property values.

Visit selected homes

  • Take your time. Carefully examine both the interior and exterior of each home you consider. If you’re seriously interested, you may want to visit more than once and take pictures for future reference and comparison.
  • Compare the prices of similar homes in the surrounding area. Your real estate agent can supply you with a list of comparable properties.
  • Be prepared to act fast if the market is competitive. A pre-approval decision letter can help you expedite the process and make a timely offer on the home you want, and may give you an advantage over other buyers. To learn more about pre-approval, call an experienced PHH Mortgage loan consultant at (800) 210-8849.

Make an offer on the home you want

  • Before deciding on your offer amount, consider such important factors as the condition of the home, the competitiveness of the local marketplace, inspections, time restrictions and more.
  • Consult with your real estate agent for professional input on the amount you want to offer, along with other details of this potentially legally binding offer.
  • Make sure your offer includes provisions for a home inspection and the actions to take if problems arise.

Arrange financing

  • Call your PHH Mortgage loan consultant with the property address and discuss the options for rates, terms, points and other details about loan programs for which you may qualify.  
  • Sign the necessary application documents. Your PHH Mortgage loan consultant can guide you through the process.

Schedule a home inspection

  • Ask your real estate agent to help you find a reputable, professional home inspector and schedule the inspection.
  • Arrange to be present during the inspection, as it is an ideal opportunity to ask important questions about the property.

Prepare for a closing

  • Make sure your closing date is scheduled prior to any rate lock-in expirations on your mortgage loan.
  • Arrange for your real estate agent or attorney to accompany you to closing to help ensure that all tasks are completed to your satisfaction.
  • Check with your closing agent to confirm the amount of certified funds you will need to prepare via a cashier's check or money order.
  • If you’re using cash from the sale of your current home, be sure to schedule the closing of your current property prior to closing on your new home.
  • Arrange for your spouse or any other party required to sign closing documents to be present.
  • Prepare to spend up to four hours in case issues arise (though closing normally takes about an hour). Alert employers and childcare providers accordingly.
  • Bring along a photo ID, such as a driver’s license or passport.
  • Arrange to have utilities turned on once you take possession of your new home.

Call with questions and get answers

If you have any questions about closing or any aspect of purchasing a home, contact one of our experienced PHH Mortgage loan consultants at (800) 210-8849.

1 This is not a commitment to lend. All pre-approval requests or applications are subject to complete underwriting review.