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Build, Buy, or Renovate Do Your Financial Research
Build, Buy or Renovat Do Your Financial Research! e
By Beth Anne Brink-Cox, House and Home Feature Writer
There are so many resolutions and fresh starts when a new year begins. One of them is often ‘this will be the year we buy a house.’
Now, that could mean buying or building a house; it could also mean refinancing your current home. How do you do that? Where do you begin? Generally speaking, your first stop is a bank or other federal lending business.
Lance Weirich, loan originator at First State Bank of Middlebury was happy to answer questions. When asked how many home loans were being seen these days, he said, “The mortgage industry exploded when rates decreased drastically in March 2020. The overwhelming volume resulting from historically low interest rates, combined with staffing shortages during the pandemic stressed local institutions, but we took measures to continue serving our clients and closing loans in a timely manner.”
Weirich added, “People are financing for a number of reasons; the obvious is getting a better rate and terms on existing mortgages. Many others are doing cash-out refinances to capitalize on the equity they have built, giving them the funds needed for home improvements.
While rates are starting to creep back up, it is creating a new wave of refinances from those who have not yet done so. The rates are still attractive, and still low when compared to historical rate environments.”
The potential blocks to financing, among others, are personal credit or not enough income. Weirich explained, “These are all factors to be considered. Income plays a huge role in the pre-approval process to determine the amount of affordable home. The funds available for down payment is another huge factor in that determination. One thing most individuals don’t realize is that if you have limited or no credit, it can be a detriment to financing, because your credit report will show little to no history and may not reflect any usable credit scores.”
There are many loan programs available that are suited for all down payments, Weirich said. “If an individual has saved 20% for a down payment or has 20% equity in their home, they will avoid private mortgage insurance. If that 20% down is not available, the more that is brought to closing can both lower the amount of monthly payments and lower the length of loan time. Unless the seller agrees to provide seller concessions which would offset all or a portion of the buyer’s closing costs, prepaids and reserves, the buyer would need to bring money for those as well as their down payment.”
And there are different property eligibility exigencies that can affect financing, as well. Weirich said, “Different loan programs have different requirements. That being said, I typically do not need anything to be done to a property unless an appraisal notes specific items that are required in inspection, or make note of something that may affect the structural integrity of a property, such as a sagging roof, deteriorating foundation, and so on.”
So you’ll want to start by looking over your finances, how much you can afford, and where you want to live. You need to keep the cost of living in mind, if you’re looking to settle somewhere other than your current location, because that will affect your financing process too; the same amount of money and down payment may buy much more house in some areas than others, and fixer-uppers need to factor in the cost of those repairs or remodels. Just remember, there is a house out there for you, and you’ll have fun finding it. n
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