Financing a Home in 2018

The American Dream of homeownership is still alive and well for many people across the country. Each year a new group of potential homebuyers enter the market and the excitement of owning their own home begins to blossom. Understanding what it means to own a home, the finances involved and all of the added expenses that come along with home ownership can sometimes be surprising, and being prepared and budgeting for the right home is a great place to begin. Many people start looking for houses, then once they find the one they love, they will try to get approved.  It’s actually a better idea to get prequalified for a mortgage so you understand which houses will fit within your family budget.  Once you have the pre-qualification you will be able to look for a house or land where you can build a custom home.

Saleswoman talking with customers at office

Working with a mortgage banker, like those at Hamilton State Bank, will allow you the ability to know what will work with your budget, and they will also assist you with any information you may need to know about down payment requirements and match you with the best loan options available.  Some homebuyers will qualify for USDA or VA loans, which provide 100% financing with no down payments, and others may qualify for FHA loans, which may provide a better interest rate than conventional financing depending on your credit rating.  FHA loans are generally granted to those whose credit ratings are below 660.  An FHA loan may also offer you the option to pay a 3.5% down payment, and in some states grants and other down payment assistance may be available.

Although the average sales price of a home is on the rise, other fees including mortgage insurance rates have seen a reduction in the past couple of years.  With interest rates still hovering below 5%, new buyers have the advantage of lower payments and ultimately more buying power.  At times there are issues with credit repair that need to be addressed prior to being qualified for a mortgage and with new  regulations in place some lenders allow non-occupying co-buyers to assist during the qualification process, should it be necessary to secure your loan. 

Young woman signing contract with manager

If you already own your land, you may have other options available to assist you with the down payment.  The process and amount allowed varies among lenders, however in some cases you may be able to allow your land equity to qualify as your down payment, and no worries if the equity doesn’t cover the full down payment you can still use the portion it will qualify for, thus reducing the amount of out-of-pocket funds you will be required to provide at closing.

For more information about being pre-qualified or learning about your finance options, visit us at