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PURCHASE, CONSTRUCTION OR RENOVATION
WHICH LOAN WORKS BEST FOR YOU?
By Don Kessler, Mortgage Loan Officer, NMLS #6880
It’s no secret that we’re in a seller’s market as the supply of homes for sale is not meeting the demand of new buyers, driving home values to all-time highs. To make matters worse, interest rates have increased, putting a squeeze on some home buyers. Many buyers are making offers on several homes before an offer is accepted. Buyers recognize the struggles, but don’t give up! Buying a home despite these challenges is possible if you position yourself to make a competitive offer within your budget.
It is more important than ever to work closely with your Loan Officer to understand your financing options and clearly understand the purchase amount you qualify for and the payment amount you are comfortable with. Equally important is to work with a Real Estate Agent you are comfortable with to give you the best analysis of the current market and guide you through the process of finding the right home for you. It is a team effort - choose the best team you can.
Work with a local lender that offers all of the options available to buyers. Opportunity Bank offers down payment assistance programs for first time borrowers through Helena Housing, NeighborWorks, Montana Community Development Corporation (MoFi), United State Department of Agriculture, Lift and HomeStart. We also offer Veterans Affairs (VA) and Federal Housing Administration (FHA) loans and loans for new construc- tion or renovation. Make sure your lender understands and presents all of the options currently available.
QUALIFYING TO PURCHASE
When looking to purchase a home, the best place to start is to begin the application process with a lender. Complete a loan application and provide the required documents for the lender to determine how much
you can qualify for. A lender will need to pull a credit report and also determine your gross monthly income. This may be determined from paystubs if employed,
or Federal tax returns if self-employed. If you’re retired, your lender will need to verify your monthly retirement income. Once your income is determined, your lender will need to verify what you’re able to provide for a
down payment, or if you qualify for down payment assistance, often this can be determined from a review of your two most recent account statements. With this information your lender can present you with financing options that are best suited to you.
CONSTRUCTION LOANS
With increased demand for existing homes and competitive market conditions, it may make sense
to consider building a home. This will likely require a construction loan unless your general contractor carries the financing of the new home.
Construction loans with Opportunity Bank require a down payment as a percentage of the total the land and construction costs. If the land is already owned, the equity in the land may cover all or a portion of the down payment requirement depending on the construction costs.
To determine the loan amount, all costs to build
are compiled along with building plans, specs, cost breakdowns and your contract with your general contractor. Your construction loan is locked at a
fixed interest rate, an appraisal completed based on the plans, and underwriting is completed for your construction loan to be ready to close. Your monthly payments are determined by the amount drawn from the loan and are calculated as an interest only payment based on the amount drawn. A draw schedule is set up based on the draws required to fund the home to completion. Once your home is built, a final inspection is completed from the appraiser to verify the home is
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