Mortgage programs to consider for your home purchase

By
Managing Real Estate Broker with Keller Williams Premier Realty

Congratulations on deciding to buy a home!  The next step is to talk to a lender to find out about mortgage programs that will help you get into a home the best way for your pocketbook.  It's not just as easy as shouting "Show Me the Money!".  Your choice of mortgage program can affect your monthly budget.

When you talk to a lender, you will have a talk about what type of loan you are eligible for. Each type of loan program has their own costs and benefits, which you need to be aware of as they affect closing costs and monthly payments. I am going to speak in generalities here, your experience may vary.

The most common program home buyers in La Crosse use is FHA. It means "Federal Housing Administration". It is a department of Housing and Urban Development. One of FHA's duties is to promote home buying and lending and to that end, it guarantees loans made by lending institutions against defaulting borrowers. FHA sets up the rules under which a buyer can get a loan. If you don't fit under these guidelines (rules), the lenders won't make a loan. The highlights of this loan are the 3.5% down payment. The lowlight is the mortgage insurance payment that you will pay for the rest of the loan's life. FHA requires that the home be in basic livable condition, so tell your Realtor which loan you will be applying for so she can be on the outlook for disqualifiers like peeling paint and adequate hand rails.

The next most common is the conventional program. You will need to make at least a 5% down payment, and maybe more to get rid of the mortgage insurance payment. Again, talk to your lender as there are some other advantages and disadvantages to this program. The home condition requirements are less strenuous, therefore you might be able to buy more of a fixer upper to gain more equity when you buy. As any good realtor will tell you, you make your money on the sale of the home when you buy it.

If you are a veteran and you qualify, you can get a loan guaranteed by the Department of Veteran Affairs. This allows you to borrow a certain amount with no or little money down and can have closing cost assist. There are higher requirements on the home condition and there will be a special appraisal. In some cases, the seller is required to pay some closing costs. Some sellers might not accept a DVA loan because of this.

If you want to buy out in the boonies, you may qualify for a Rural Development Loan.  It is guaranteed by the USDA (United States Department of Agriculture) to encourage home ownership in less populated areas. This program allows for no down payment for your purchase.  This doesn't mean that you don't need any money to purchase with this loan.  Read here for more information.  There are stricter requirements for housing condition, so beware that there might be some issues you need to negotiate in the closing period.

So, say you find the ideal home, but it needs a few fix ups.  Paint, carpet, maybe new appliances or a water heater.  Maybe it doesn't quite qualify for a regular FHA loan, but the price is right and it's the perfect house for you.  There's a program for that!! A 203k program will allow you to borrow money for the home purchase and also some money for repairs.  The catch you ask?  You can only borrow up to what you have been approved for.  Meaning, if you are approved for a $100,000 loan, you can't buy a $100,000 home and request $20,000 for home improvements.  All money asked for must be under the amount you are approved for.  There are more hoops to jump through to get everything done, and you must get all repairs done within a certain amount of time after closing on the home.

There are also first time home owner programs out there for you, mostly through the state and federal government and some by particular lenders.  It usually involves home owner education programs.  In Wisconsin, the program is called WHEDA, which stands for Wisconsin Housing...er..um..something, something, something.  Ask your lender.  They will know what it stands for.  You can get low to no down payment programs and/or programs to help out with closing costs.  Make sure you thoroughly understand these programs thouroughly as it can lead to nasty surprises when you want to sell your home.  Trust me.  This comes from personal experience.  It was kind of nasty at the time.   Minnesota also has a first time home buyers program also.

You may find other wonderful and quirky mortgage products in your research that you will be doing.  If you have any questions, don't hesitate to ask me or better yet, ask your lender.

Previous blogs you might find helpful:

Buying a home in La Crosse

1st step in buying a home

Buyer beware!  No down payment doesn't mean no cost

Posted by

Joan Dickie

Broker, Licensed in WI and MN

Proudly serving La Crosse County WI and Houston County MN

608-788-6012 (office)

608-397-1790 (cell)

joanmdickie@gmail.com

 

 

 

Comments (12)

Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Great blog,  Joan. Lots of good information for those in the market for a new home.

Feb 16, 2016 01:28 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Joan indeed the next step is to talk to a lender and George Souto  would agree with this statement, Endre

Feb 16, 2016 01:32 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Joan

There's some important information here for buyers who need financing to buy their new home. All loan programs, and lenders, are not alike and due diligence is essential to make the right decision for a buyer's personal and financial situation

Jeff

Feb 16, 2016 02:10 PM
Dana Tapia
Re/Max of Orange Beach - Orange Beach, AL
Gulf Coast Real Estate Professionals

We learned about the different kinds of loans in the real estate course I took, but it really only scratched the surface of what's available.  One more thing that I really didn't realize you needed to know to be a realtor.  

Feb 17, 2016 05:47 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is very good information to share with prospective home buyers.

Have a most productive month!

Feb 17, 2016 06:27 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Joan

Thanks for sharing the information on the mortgage products that the home buyers are selecting when they purchase a home.

Good luck and success.

Lou Ludwig

Feb 17, 2016 10:02 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Joan, great post about the different loan choices buyers have when they call a lender for a home purchase.  

Feb 20, 2016 11:43 PM
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

joan, Informative and excellent discussion of loan programs. I will book mark. 

Feb 21, 2016 06:20 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

Good information sharing Joan.  There are so many loan programs and one is just right for the buyers and you can help them sort it out.

Feb 21, 2016 12:35 PM
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Joan Dickie - You're my point of contact for buyers wanting to move to beautiful LaCrosse, WI, where the bluffs are mystical with beautiful views, great Universities, and great choices for buyers to own.

Feb 22, 2016 12:10 AM
ba`B Ratliff
Robert Ratliff Realty - San Antonio, TX
"Sold with Bob"

Joan, buyers often don't know which loan they should use and it's nice for them to know what will work in their situation. Thanks for sharing your wonderful information.

Feb 26, 2016 09:14 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

I hope you are enjoying a very productive month. Have an outstanding weekend.

Feb 26, 2016 09:58 PM

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