Whether you’re a first-time home buyer or are considering a change to your current home, there are many options to consider. What do today’s rates mean for you? Is building a home even feasible, or should you add on to your current home? Would a renovation be a smart choice?
Weighing the complexities of these choices and knowing where to begin can be overwhelming. Arvest Bank is here to help.
Buying a Home
Buying a home is a huge, exciting milestone. Ensuring that you know all of your lending options and feeling confident that you’re making the best decision in your situation can feel overwhelming, especially in today's rate environment. Finding a mortgage lender who can explain the types of mortgage loans available to you is a great place to start. Depending on eligibility, that could include conventional, FHA, USDA or VA loans.
Interest rates are higher than the historical lows of 2021, but remembering that interest rates are cyclical is key. If rates drop in the future, there's a chance you could refinance to a lower rate. So, look beyond the rate. There are other factors to keep in mind, such as loan terms, fees, and whether your loan will be serviced locally or sold to another lender. There are benefits to having a local bank service your mortgage, especially if you have an insurance claim later.
Building a Home
The opportunity to design every detail of your home may seem like a dream situation, but the process of building a home requires careful planning and financial preparation. Unlike a traditional mortgage, construction loans are short-term loans that provide funds in stages as you build your home. Understanding the draw schedule and inspection process is crucial to ensuring timely disbursements. Once the home is built, the construction loan is often refinanced into a traditional mortgage with a longer term.
Additionally, if you are planning to buy land and build on it, you could combine financing for the lot construction and the home. If you already own the land, you could use it as collateral for the construction of a home.
Renovating a Home
If you’ve decided to update your current home or are considering buying a fixer-upper, there are lots of things to consider when it comes to renovations. Homeowners have multiple financing options, such as savings, credit cards or tapping into their home's equity with a home equity line of credit (HELOC) or a cash-out refinance.
A HELOC is a revolving line of credit that you can draw from at any time throughout the set borrowing period, typically 5 to 10 years. This is helpful for funding multiple home improvements or planning renovations over a longer period of time. Cash-out refinance is a mortgage that replaces your existing loan with a new, larger one, allowing you to convert a portion of your home's equity into a cash lump sum that you receive at closing.
There is also the option of a rehab loan, which can help you finance the purchase of a home and the renovation together with one single mortgage.
Whether you’re buying, building or “boosting,” your home’s value, you want to work with professionals you trust to help you make the best decisions for your home. Ready to learn about your options? Contact a lender today.
