There are a number of Wisconsin home loan programs to choose from, picking the right one can be a daunting task. This is a big decision and should not be taken lightly. Chances are you’ll gain some advice from friends, family, neighbors, co-workers, in-laws, and real estate agents. Generally any homeowner you ask will have an opinion on the matter. The problem is, they will probably have different opinions based on their own personal experiences and situations.
So then, how do you pick the perfect Wisconsin mortgage for your personal situation. Do you simply walk into your bank and say “I need a home loan” and go with the first option they offer you? No, indeed, you do not. Before you even talk to a lender, you will need to ask yourself some very important questions.
- Do I want to work with a banker who may have limited options or do I want to work with a mortgage broker who will have multiple options?
- How long do I plan to stay in this home?
- How comfortable am I taking a financial risk?
- How much money do I have to put down?
- Do I want to put down less money so I can afford to make some updates, buy new furniture or put in landscaping?
- How much do I want to spend on house expenses each month?
- Do I qualify for a VA mortgage or a USDA mortgage?
- Do I qualify for a conventional mortgage, or will I need an FHA mortgage or jumbo mortgage?
Are you feeling even more confused than before? Lets break down the questions a little bit.
- Mortgage banker vs. mortgage broker. Your local bank will be limited by the few types of loans offered by that particular bank. This can be a good option if you know you will qualify for a conventional loan and you feel most comfortable working with the bank that you have your checking/savings account with. On the other hand, a mortgage broker has the ability to shop around to different lenders to find the best deal. They generally have access to more home loan programs like FHA mortgages, USDA mortgages, VA mortgages, jumbo mortgages as well as conventional mortgages.
- Most people can’t really say how long they will stay in their home, but it’s good to ask yourself if this is short-term or long-term. Maybe this is a starter home and you plan to upgrade within 5 years, maybe you plan to relocate in three years or maybe this is where you hope to send the rest of your life (or at least until you retire and move to Florida or Arizona). This is especially important if you are looking into a fixed rate mortgage or an adjustable rate mortgage (ARM).
- When choosing between a fixed rate and an ARM, it’s also important to know how much you want to gamble. Maybe you’re a free spirit, willing to throw caution to the wind in order to get a better rate with an ARM. However, if you prefer the security of knowing your interest rate will stay the same for the life of the loan and not skyrocket in 5, 10 or 15 years from now; the fixed rate mortgage will be your best route.
- You may have a lot to put down on your new home, or you may not have so much. Some Wisconsin mortgages require larger down payments than others. You may even qualify for a home loan with no money down.
- You might have the money to put down; but would it ever be nice to remodel the kitchen, or actually furnish your new home or put up a fence. Some mortgages require more cash at closing than others.
- You may qualify for a larger loan than what you really want to spend each month. Each loan package comes with a completely different monthly payment, so it’s important to know what you’re comfortable with.
- If you are military veteran or active service member, you may qualify for a VA loan. This could save you money and give you more home loan options. You may qualify for a USDA mortgage if your purchasing a home outside of a large city. There are restrictions to both types of government programs, but it’s always good to check into all options.
- Not everyone qualifies for a conventional loan, so it’s good to know other Wisconsin mortgage programs which may be a better fit for you. FHA mortgages are government loans with more lenient guidelines and jumbo mortgages are used if the loan amount exceeds the Wisconsin conventional limit of $424,100.
Once you’ve answered some of these questions for yourself, it’s probably time to talk to a home loan professional. Formulate a list of questions and weigh all of your options before locking in your loan.