“How Can I Afford A Home In Today’s Market?” We’re Here To Help!

The current housing market has impacted many potential homebuyer’s decisions to purchase. With higher rates, it’s understandable to wonder about how to afford a home. With decades of experience helping homebuyers afford their home with home financing solutions, Bosgraaf Homes is happy to be a resource for you throughout your homebuying process. We understand that you have many reasons why you’re looking for a new home, and we don’t want the current market conditions to hold you back from one of the greatest purchases you’ll make. Here’s a guide to help you understand how you can afford a home and additional ways we can help you.

Solutions To Home Financing For Every Buyer

Loans

A majority of homebuyers purchase using home financing with the help of a loan. There are many types of home loans available to accommodate your personal and financial situation.

1. Conventional

As one of the most common types, conventional mortgages are great for those with a debt-to-income ratio below 50% and a credit score above 620. You can make a down payment anywhere from 3%-5%, or up to 20% depending on what you can afford and your qualifications. If you pay less than 20%, you’ll need to also pay for Private Mortgage Insurance. Conventional mortgage borrowing cost after fees and interest tends to be lower than other loan types.

2. Fixed-Rate

With a fixed-rate mortgage, you can better anticipate your budget and monthly payments. This is because the principal and interest payments will not change throughout the loan term. A fixed rate is a great choice for when interest rates are low, however, you can always refinance once rates are lower if you purchase at a higher rate.

3. Adjustable-Rate

Adjustable-rate mortgage’s interest rate can fluctuate. However, you’ll initially have a lower rate that doesn’t change, but only for a specific amount of time called an introductory period. After that, the rate can go up or down depending on the current market rates. There is a cap to how high or how low your rate can go. This can be a good option for purchasing a starter home that you don’t plan to live in forever.

4. Government-Backed

These mortgage options have more lenient criteria to qualify and suit those with low credit or savings. They’re insured by government agencies, including the Federal Housing Administration (FHA), Veterans Affairs (VA), or the United States Department of Agriculture (USDA).

5. Jumbo

Jumbo loans are for purchasing high-value properties that can cost upwards of $2 million. The qualifications are much harder to meet as you’ll need a higher credit score (700+), a very low debt-to-income ratio, and a higher down payment and/or cash reserves compared to other loans.

Refinancing

Refinancing a mortgage is when you reapply for a mortgage loan with new terms. This could be to take advantage of a lower interest rate, update the years to pay the loan (ie. from 30 to 15), payments, and other terms. Many refinance due to interest rates decreasing. You can use the same lender or search for a new lender to complete the refinancing process. Your finances and credit will be re-evaluated to determine what new terms you qualify for. If wondering, “Should I refinance?”, you should consider whether your credit profile has improved or if the lower rate or new terms will significantly impact your payments and how much you’ll save over the life of the loan. Another thing to consider is that rates will always fluctuate, while you can always find a home within your price range. For instance, right now home prices have stabilized, so it’s a smart move to lock in the price on a home you love now before buyers flood the market and cause them to increase.

Using Your Home’s Equity

The difference between the current value of your home and the outstanding balance of your mortgage is called home equity. Borrowing from your home’s equity can be helpful for many reasons, one being to purchase your next or second home. Here are some pros to using your home’s equity to purchase a new home.

• A streamlined process that doesn’t include going through underwriting a second time.
• You can use your equity to put down a larger down payment and decrease how much you need to borrow.
• Interests, closing costs, and fees may be lower if you use a home equity loan or a home equity line of credit.
• If used to purchase a second home, you’ll build wealth in the long term when using it as a rental property.

Financial Savings & Programs

Bosgraaf Homes is a partner you can trust throughout your home-buying journey. We always take into consideration the current market and your unique circumstances when helping you find the right home financing option for you. We only work with trusted, experienced lenders to come up with solutions that fit your needs. Here are the current incentives and programs you can take advantage of when partnering with us.

1. 2-1 Buydown

• Lower your interest rate for the first 2 years.
• We pay the buydown cost.
• Example: If the full interest rate is 7.25%, your first year’s interest rate will be 5.25%, and then your second year’s interest rate will be 6.25% before returning to 7.25% in the third year and beyond.

2. 3-for-3

• Slowly combat high interest rates.
• Refinance your rate when they decrease.
• You can refinance up to 3 times within 3 years and potentially save thousands over the life of your loan.

3. Equity Forward

• Upgrade to a new home using your home’s equity.
• There are contingencies on this offer.
• Use equity for down payment, costs, and appraisal gap.
• Access up to 75% equity and up to $150,000.

4. Peace of Mind Program

• Build or buy the home you want now with a fixed rate.
• Refinance (when rates are lower) between 6 to 24 months after closing.
• Lender fees will be waived when refinancing within 2 years.

Contact Bosgraaf Homes Today for More Info!

Financing can be one of the most intimidating parts of buying a new home, but Bosgraaf Homes is here to help you along the way. Hopefully, we’ve given you a good foundation for starting the home financing process. We’re happy to continue finding solutions that work for you. If you’re considering a new home in West Michigan, browse some of our new homes and let us know if you have any questions!