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Townhome vs. House in Alderwood: What to Know Before You Finance

The Alderwood area of Lynnwood is a fantastic place to call home, offering a perfect blend of suburban comfort and urban convenience. As you browse listings, you’ll see two great options dominate the market: traditional single-family homes and stylish, modern townhomes.

A single-family home offers a private yard and total autonomy. A townhome provides a low-maintenance lifestyle, often with shared amenities and a strong sense of community. While you’ve likely weighed the lifestyle pros and cons, have you considered how your choice impacts your mortgage?

Financing a townhome isn’t just about your credit and income; it involves an extra layer of scrutiny that buyers need to be prepared for. As a local mortgage expert, I want to walk you through the key differences.

The Baseline: Financing a Single-Family Home

When you get a mortgage for a single-family house, the lender focuses primarily on two things:

1. You, the Borrower: Your financial health is under the microscope. Lenders review your credit score, income stability, assets, and debt-to-income ratio to ensure you can comfortably afford the loan.
2. The Property: The lender orders an appraisal to confirm the home’s value is in line with the purchase price. This protects their investment.

If you are financially qualified and the house appraises for the right value, you’re generally on a clear path to approval.

The Extra Step: Financing a Townhome with an HOA

When you buy a townhome, you’re not just buying a home; you’re buying into a community governed by a Homeowners Association (HOA). For a mortgage lender, this introduces a third critical element to approve:

3. The Health of the HOA: Why does your lender care about the HOA? Because a poorly managed or financially unstable association can negatively impact property values. If the HOA can’t afford to replace the roofs or maintain the grounds, the entire community suffers, putting the lender’s investment at risk.

Before approving your loan, the underwriter will conduct a thorough review of the HOA’s documents and financial health.

What Your Lender Will Scrutinize in the HOA

To protect their investment, your lender will request an “HOA Questionnaire” or “Condo Cert” and review key documents. Here are the crucial things they look for in September 2025:

• The Budget & Reserve Funds: Does the HOA collect enough in dues to cover routine maintenance? More importantly, do they have a healthy reserve fund set aside for major future repairs like new siding, paving, or roofs? A low reserve fund is a major red flag.
• Owner-Occupancy Ratio: Lenders prefer communities where a high percentage of residents are owners rather than renters. A stable, owner-occupied community tends to be better maintained.
• Delinquency Rate: The lender will want to know how many homeowners are behind on their HOA dues. If more than a small percentage (typically 15%) are delinquent, it could signal financial instability and make it much harder to secure financing.
• Adequate Insurance: The HOA must carry a master insurance policy that covers all common areas and meets the lender’s requirements for liability and hazard coverage.
• Pending Litigation: Is the HOA currently involved in any lawsuits? Active litigation can create uncertainty and risk, often halting a loan approval in its tracks.

Your Partner in the Process

Choosing between a townhome and a single-family home in the Alderwood area is an exciting decision. Townhomes offer a fantastic, low-maintenance lifestyle perfect for many buyers. The key is to enter the financing process with your eyes wide open.

This extra layer of review is why it’s so important to work with a mortgage advisor who has deep experience with townhome financing right here in Lynnwood. We know what lenders are looking for, can help you spot potential red flags early, and can guide you toward a smooth, successful closing.

Uncovering the Hidden Costs of Buying a Home in Washington

Beyond the Down Payment

You’ve done the hard work. You’ve saved diligently, improved your credit score, and you’re finally ready to buy your first home. As you look at listings and dream of getting the keys, it’s easy to focus on the two big numbers: the purchase price and the down payment.

But what about the other costs? For first-time homebuyers, the journey from an accepted offer to a signed closing document involves several necessary expenses that often come as a surprise. As a local mortgage expert right here in Lynnwood, my goal is to pull back the curtain on these “hidden” costs so you can budget with confidence and avoid financial stress on closing day.

Let’s break down the expenses you need to plan for beyond your initial down payment.

1. Earnest Money: Your Good Faith Deposit

Once a seller accepts your offer, you’ll need to provide an earnest money deposit. This isn’t an extra fee, but rather a portion of your down payment paid upfront to show you’re a serious, committed buyer. It’s held in a neutral escrow account until closing.

• Local Insight: In a competitive market like Snohomish County, a strong earnest money deposit can make your offer more attractive. While the amount is negotiable, it often falls in the range of 1-3% of the purchase price. For a home at the average Lynnwood price point of around $750,000, this could mean preparing for a deposit of $7,500 to $22,500.

2. The Home Inspection: Your Key Due Diligence

You wouldn’t buy a car without a test drive, and you shouldn’t buy a home without an inspection. A professional inspector will examine the home’s structure, roof, plumbing, electrical systems, and more, identifying potential issues that aren’t visible during a showing. This is a critical step to protect your investment.

• Local Insight: In our area, a standard home inspection can cost several hundred dollars. If the inspector finds signs of specific issues, they may recommend further evaluations, such as a sewer scope or a pest inspection, which would be additional costs. While it may seem like a lot upfront, this expense can save you thousands in unexpected repairs down the road.

3. The Appraisal: Validating the Home’s Value

Your lender will require a professional appraisal to ensure the home is worth the price you’ve agreed to pay. An appraiser will assess the property’s condition, size, and features, and compare it to recently sold homes in the same neighborhood—whether that’s in Alderwood, Mountlake Terrace, or Edmonds.

• Local Insight: The appraisal fee is an upfront, out-of-pocket expense for the buyer. It’s a necessary step for the lender to finalize your loan approval, and it gives you peace of mind that you’re making a sound investment.

4. Closing Costs: The Final Financial Hurdle

“Closing costs” is a broad term for all the fees associated with finalizing your mortgage and transferring the property title into your name. These costs are typically paid on closing day and can add up to 2-5% of the total loan amount.

Here are a few of the key fees included:

• Loan Origination Fees: Charged by the lender for processing and underwriting your loan.
• Title Insurance: Protects you and the lender from any future claims against the property’s title.
• Escrow Fees: Paid to the neutral third party that handles the closing documents and transfer of funds.
• Prepaid Expenses: You may need to prepay a certain amount of property taxes and homeowner’s insurance premiums, which are then held in an escrow account.

Plan Ahead for a Smooth Closing

Buying your first home is an exciting and empowering journey. Knowing all the potential costs ahead of time allows you to budget effectively and move forward with confidence. The exact amount for these expenses will vary, but a good mortgage advisor will provide you with a detailed estimate early in the process so there are no surprises.

Navigating the New Tax Landscape: What Homebuyers and Owners Need to Know

The real estate market is constantly influenced by a variety of factors, and new legislation is one of the most significant. A recently proposed tax bill could bring notable changes to the housing market, impacting everyone from first-time homebuyers to seasoned real estate investors. Understanding these potential shifts is key to making informed decisions about your property and mortgage.

Key Changes for Homeowners in High-Cost Areas

One of the most discussed aspects of the proposed legislation involves changes to state and local tax (SALT) deductions. The bill suggests increasing the deduction cap, which could provide significant tax relief for homeowners, particularly those living in states with higher property and income taxes. This change could stimulate housing demand in these areas, potentially influencing home values. For current homeowners, this may affect your home’s equity, while prospective buyers might see a shift in market dynamics.

Incentives for Real Estate Investment

The proposed tax bill also includes provisions that could be advantageous for real estate professionals and investors. By making certain business income deductions permanent and reintroducing favorable depreciation rules, the legislation aims to encourage more investment in both residential and commercial properties. This could lead to an increase in development and a more active real estate market, creating new opportunities for those looking to invest in property.

Considerations for the Broader Housing Market

While the bill offers potential benefits for certain segments of the market, it also has broader implications. For example, the legislation is expected to have a more gradual impact on the affordable housing sector. The bill proposes an expansion of tax credits designed to encourage the development of low-income housing, but experts suggest these changes will take time to fully materialize.

Additionally, the bill addresses various energy efficiency tax credits, which could influence construction costs and the availability of new homes. This is an important consideration for the overall housing supply and for buyers interested in newly built properties.

What This Means for Your Mortgage Journey

The housing market is complex, and new legislation adds another layer to navigate. Whether you are buying your first home, looking to move, or considering a refinance, these potential changes underscore the importance of expert guidance. A knowledgeable mortgage advisor can help you understand how the evolving financial landscape might impact your specific situation and help you plan accordingly.

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Your Essential Guide to Buying Your First Home in Washington

Buying your first home is one of life’s most exciting milestones. If you’re ready to take the leap in Washington State, a little preparation goes a long way. Understanding the key steps can transform this complex process into a smooth and rewarding journey. This guide provides a general roadmap to help you navigate your path to homeownership.

1. Understand Your Financial Big Picture

Before you start Browse listings, the first and most crucial step is to look at your finances. This means getting a clear understanding of your budget, credit, and down payment resources.

• Budget: Take a detailed look at your reliable monthly income and your regular expenses. This will help you determine a comfortable monthly mortgage payment and give you a realistic idea of your spending power.
• Credit: Your credit score is a key factor that lenders consider. It’s wise to know your score early in the process, as a higher score often leads to more favorable loan options.
• Down Payment: Assess your savings to determine what you can afford for a down payment. A larger down payment can reduce your loan amount and potentially eliminate the need for mortgage insurance. There’s no single “right” amount; it’s about finding the right balance for your unique financial situation.

2. The Power of Pre-Approval

Once you have a handle on your finances, the next step is getting pre-approved for a mortgage. A pre-approval is a formal evaluation by a lender that you are qualified to borrow a certain amount. This is a powerful tool for several reasons:

• It shows sellers that you are a serious and credible buyer.
• It helps you narrow your home search to properties within your budget.
• It streamlines the closing process once you find the right home.

3. Explore Washington’s Homebuyer Programs

Washington State is committed to helping first-time buyers achieve their homeownership dreams. The Washington State Housing Finance Commission (WSHFC) offers several valuable programs, including educational seminars and down payment assistance loans. These resources are designed to make buying a home more accessible, especially for those with moderate incomes or who need a little help with the upfront costs. Taking advantage of these state-sponsored programs can be a game-changer for many new buyers.

4. Assembling Your Homebuying Team

You don’t have to navigate this journey alone. Finding the right real estate agent is critical. Look for an agent with deep local expertise in the neighborhoods you’re considering. They can provide invaluable guidance, from finding the perfect property to negotiating the final purchase agreement.

Your team also includes your mortgage advisor, who will guide you through every step of the financing process, ensuring you understand your options and feel confident in your decisions.

5. From Offer to Closing

Finding the right home is just the beginning. After you make an offer and it’s accepted, a few more critical steps remain. A home inspection is essential to uncover any potential issues with the property before you commit. Following that, your lender will require an appraisal to confirm the home’s value. Finally, your loan will go through underwriting for the final approval before you get the keys to your new home.

Navigating the path to homeownership is a marathon, not a sprint. By taking a thoughtful and prepared approach, you can make your dream of owning a home in Washington a reality.

New Legislation and Your Mortgage: What You Need to Know

Keeping up with new legislation is key to making savvy financial decisions, especially when it comes to the biggest investment of your life: your home. Recent updates to federal law have introduced significant changes that directly affect the financial landscape for current and future homeowners. For anyone looking to purchase a new home or refinance a current mortgage, understanding this new stability in the tax code is essential.

Let’s explore these updates with a few examples to see how they might apply to you.

Benefit for First-Time Homebuyers: The Mortgage Insurance Deduction

One of the most important updates in the new law is the permanent extension of the mortgage insurance (MI) premium deduction. This is particularly beneficial for first-time homebuyers who often make a down payment of less than 20%.

• Example: Consider a young couple, Alex and Jessica, who are excited to buy their first home. They have saved diligently but don’t have enough for a 20% down payment, so their loan requires mortgage insurance. In the past, the tax deduction for this MI premium was temporary and had to be renewed by Congress, creating uncertainty. Now, this deduction is permanent. Alex and Jessica can factor this tax benefit into their budget with confidence, knowing it will be there for them as long as they pay MI and meet the income requirements. It provides a small but stable financial cushion that makes their dream of homeownership more manageable.

Clarity for Future Planning: The Mortgage Interest Deduction

The new law also brings long-term clarity by making the current cap on the mortgage interest deduction (MID) permanent. This removes the “what if” factor for homeowners and buyers, allowing for more precise long-term financial planning.

• Example: Imagine the Smith family, who are looking to sell their current house and buy a larger home to accommodate their growing family. A major part of their budget calculation is understanding the tax benefits of their new, larger mortgage. Because the rules around the MID are now permanent, their financial planning becomes much clearer. They can work with a mortgage advisor to understand exactly how a new home loan will impact their tax situation for years to come, allowing them to confidently determine their price range and make a competitive offer. The same certainty applies to homeowners considering a cash-out refinance for a major home renovation.

Why Legislative Stability Matters

Whether you are buying or refinancing, stability in the tax code is incredibly valuable. When rules are permanent rather than temporary, it removes uncertainty from your long-term financial strategy. You can set a budget, plan for future expenses, and build wealth through home equity with a much clearer understanding of the landscape.

These legislative updates are a positive step toward creating a more predictable environment for homeowners. However, navigating the specifics of how they apply to your unique situation is where expert guidance becomes essential.

The mortgage landscape is always changing. Let us help you navigate it with confidence. Contact us today to discuss your home loan options and create a personalized plan for your future.

This article is for informational purposes only and is not tax or legal advice. Fairway Independent Mortgage Corporation and its loan officers do not provide tax or legal advice. Please consult a qualified professional regarding your individual situation. All programs and guidelines are subject to change without notice.

Holiday Fire Safety

During the holiday season, homes are often beautifully decorated with candles, fresh garlands and trees adorned in lights. While the wonder of the season is exciting, it is important to be aware of potential fire hazards. Follow the tips below to make sure your home is festive and free of potential danger.

1. If you choose to decorate a live tree, try to find one that is fresh. Fresh trees are safer for your home because they are less likely to catch fire. Some indicators of a fresh tree are:

• Vibrant green color with needles that are not easily plucked
• A trunk that is sticky with resin

Watch out for trees that have a greenish cast to their trunks and branches, as some growers spray trees with green paint to make them more appealing to buyers.

1. When decorating your Christmas tree (live or artificial), ensure your tree won’t start an electrical fire. Some good tips include:

• Use only lights that have been tested for safety (a label from an independent testing laboratory should appear on the box)
• Check each set of lights for broken sockets, frayed wires or loose connections
• Use a maximum of three standard-sized strings of lights per single extension cord
• Keep cords and lights away from the tree’s water supply

1. To dispose of your tree, take it to a tree recycling center or have it hauled away by a community pick-up service. Never burn trees, branches or needles in a fireplace or woodstove. Fir trees and pine trees have a copious amount of sap, which can explode.

For more on holiday fire safety, click here. If buying a new home is on your list of resolutions for the new year, I would welcome the opportunity to speak with you about your homebuying needs! Let’s plan to meet soon.

Are There Different Types of Credit Scores? Here’s What You Should Know

Stacey Sprain
Home.com Contributor
11/26/2021

If you’re used to checking your credit score through a free app or credit card account, you might be surprised to know that the number you see there doesn’t tell the whole story. There are several types of credit scores.

In fact, the credit scores you see online through free credit report and scoring sites are probably not the same credit scores a lender will use when you apply for a loan or credit.

“It is important to make a distinction between consumer credit scores and the FICO scores that lenders use,” said Dylan Hoffman, a senior mortgage consultant with Fairway Independent Mortgage Corporation (Fairway owns Home.com). “Consumer scores will generally be higher because they are on a larger scale. This can get confusing because there are also different FICO scoring models, depending on the type of lender.”

Below, we explain the three most common credit scoring models you’re likely to run across in the market.

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