Housing Market Q&A

There are a lot of questions about the future of the housing market. While we can't predict what will happen, we can offer some tips and insights into your questions about buying, building, saving for a new home. 

How are mortgage interest rates determined?

General mortgage interest rates are determined by several economic factors, including current market demand, federal reserve monetary policy, bond markets, and inflation. Individual interest rates are determined by credit score, amount of down payment, product type, and length of the loan.

What is the difference between an adjustable-rate mortgage vs a fixed rate loan?

An adjustable-rate mortgage (ARM) begins with a set interest rate for a specified number of years. After that, the rate is adjusted periodically according to broad market conditions. Fixed-rate mortgages have interest rates that stay the same through the life of the loan. Your lender will be able to help you choose based on your financial situation and goals for the loan.

How does my credit score affect getting a home loan?

Lenders may offer lower interest rates to borrowers with good to excellent credit scores, as they are viewed as less risky. Reach out to your lender for a credit consultation if you are concerned about your credit score number.

How do I know my home budget?

It is important to discuss finances with your lender early in the process. Start by understanding your income and expenses, estimate your housing costs, and determine how much you want to put down for a down payment- and don't forget closing costs.

What is the suggested timeline for buying a house?

About 90 days before you want to start looking for homes, find a lender to get prequalified and go over your financial goals for buying a new home. Next, find a realtor to discuss the availability in your price range. Once you enter in a contract for a home, allow for a minimum of 30 days to close.

Is there a best time to buy or build a home?

There is no perfect time to build or buy. Start the process when it is right for you. However, different times of the year lend to different advantages. During the warmer months, builders can work more efficiently, minimizing weather delays and getting you into your home sooner. In the colder months, there is less competition and lower demand, but building is more costly in our seasonal climate.

What are some tips for building right now?

If you are interested in building a home, here are some things to consider. Work with your lender and builder to set a realistic budget, including a buffer for unexpected expenses, and find the best financing fit for your situation. We recommend partnering with a knowledgeable, trusted lender for construction financing because it is a specialized product unlike a typical mortgage loan.

How long is the construction loan process?

Home builds will vary between 7-12 months based on complexity, location, material availability. The usual loan term is 12 months. Most construction loans offer interest only payments during the construction phase and flexible end-term financing options once your home is complete.

Are there options for down payment assistance?

Ask your lender about options for down payment assistance or federal and state programs that you might be eligible for. The Downpayment Plus program through Federal Home Loan Bank of Chicago grants buyers up to $10,000 toward down payment and closing costs. Participating lenders can go through the specifics and qualifications with potential applicants.

Another option is finding a loan with a low or no down payment requirement. These government-backed loans, such as Federal Housing Administration (FHA), United States Department of Agriculture (USDA), and Veterans Affairs (VA) loans, offer low or no down payment requirement and lower interest rates. WHEDA is a state-sponsored housing program with similar benefits as well. 

In summary, the housing market will always fluctuate, and it is important to make home-buying or building decisions based on your financial situation and what is best for you. Always reach out to knowledgeable experts in their field before you make any decisions. They are there to help you determine eligibility, available loan options, and assist you in a smooth experience. Get started with our mortgage lenders today!