How to Finance Your Home Purchase: A Guide for Buyers in Lake Geneva and Surrounding Areas

by Kim & Joel Reyenga

How to Finance Your Home Purchase: A Guide for Buyers in Lake Geneva and Surrounding Areas

Buying a home is one of the biggest financial decisions you will ever make. Whether you're a first-time homebuyer or a seasoned investor, understanding how to finance a home is crucial to ensuring a smooth and successful transaction.

As local real estate experts with eXp Realty, Kim & Joel Reyenga help buyers navigate the Lake Geneva real estate market and find financing solutions that best fit their needs. In this guide, we’ll explore the key steps to financing a home, different mortgage options, and expert tips to help you secure the best loan for your situation.

1. Understand Your Home Financing Options

Before starting the home search, it’s important to understand the different ways to finance your home purchase. The most common options include:

Traditional Mortgage Loans

Conventional Loans – These loans are not backed by the government and require a credit score of at least 620. They typically come with lower interest rates for well-qualified borrowers.
FHA Loans – A great option for first-time buyers, FHA loans require a lower down payment (as low as 3.5%) and are backed by the Federal Housing Administration.
VA Loans – Available to eligible veterans and active military members, VA loans offer zero down payment options and competitive interest rates.
USDA Loans – Ideal for buyers in rural and suburban areas, these loans require no down payment and are backed by the U.S. Department of Agriculture.

Alternative Financing Options

Adjustable-Rate Mortgages (ARMs) – These loans offer a lower initial interest rate that adjusts periodically based on market conditions.
Jumbo Loans – Designed for buyers purchasing luxury or high-value properties, jumbo loans exceed the conventional loan limits set by Fannie Mae and Freddie Mac.
Bridge Loans – A short-term loan option that allows homeowners to buy a new property before selling their current home.

Expert Tip: If you're unsure which financing option is best for you, Kim & Joel Reyenga can connect you with trusted mortgage lenders in the Lake Geneva area to explore your choices.

2. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage is one of the most important steps before starting your home search. Pre-approval helps you:

Understand your budget and the price range you can afford.
Show sellers that you’re a serious buyer, which can strengthen your offer.
Lock in an interest rate before market conditions change.

Steps to Get Pre-Approved:

Check Your Credit Score – A higher credit score typically means better loan terms and lower interest rates.
Gather Financial Documents – Lenders will require:

Recent pay stubs
Tax returns and W-2s
Bank statements
Debt and loan information

Choose a Lender – Work with a local lender who understands the Lake Geneva real estate market.
Submit Your Application – The lender will review your finances and issue a pre-approval letter.

Expert Tip: Pre-approval is different from pre-qualification. Pre-approval requires verification of financial documents and gives you a more accurate loan estimate.

3. Save for a Down Payment and Closing Costs

A common misconception is that buyers need 20% down to purchase a home. In reality, there are many loan programs with lower down payment requirements.

How Much Should You Save?

Conventional Loans – Typically require 5-20% down.
FHA Loans – Require 3.5% down with a credit score of 580 or higher.
VA & USDA Loans – Require zero down payment for eligible buyers.

Other Costs to Consider:

Closing Costs – These typically range from 2-5% of the home’s purchase price and include loan fees, title insurance, home appraisal, and inspections.
Private Mortgage Insurance (PMI) – If you put less than 20% down, you may be required to pay PMI, which protects the lender in case of default.

Expert Tip: Some down payment assistance programs in Wisconsin offer grants or low-interest loans to help first-time buyers afford homeownership.

4. Improve Your Credit Score to Get the Best Mortgage Rates

Your credit score plays a major role in determining the interest rate and loan terms you qualify for. Even a small improvement in your score can save you thousands of dollars over the life of the loan.

Ways to Improve Your Credit Score Before Buying a Home:

Pay down credit card balances to reduce your debt-to-income (DTI) ratio.
Avoid opening new credit accounts before applying for a mortgage.
Make all payments on time to build a strong payment history.
Check your credit report for errors and dispute any inaccuracies.

Expert Tip: Mortgage lenders typically offer the best interest rates to buyers with a credit score of 740 or higher.

5. Choose the Right Loan Term: 15-Year vs. 30-Year Mortgage

Most buyers choose between a 15-year or 30-year mortgage. Each option has its pros and cons depending on your financial goals.

15-Year Mortgage:

Lower interest rates and less interest paid over time.
Higher monthly payments, but faster loan payoff.

30-Year Mortgage:

Lower monthly payments, making homeownership more affordable.
More interest paid over time, but greater financial flexibility.

Expert Tip: If you plan to stay in your home long-term and can afford higher payments, a 15-year mortgage can save you tens of thousands of dollars in interest.

6. Finalize Your Mortgage and Close on Your Home

Once you find your dream home and have an accepted offer, your lender will finalize the mortgage approval process.

Steps to Closing on Your Home:

Home Appraisal – The lender will conduct an appraisal to confirm the home’s value.
Home Inspection – A professional inspector will check for structural issues and needed repairs.
Final Loan Approval – The lender will verify your financial documents before issuing a clear to close.
Closing Day – You’ll sign the final paperwork, pay your closing costs, and receive the keys to your new home.

Expert Tip: Avoid making large purchases or changing jobs before closing, as this can affect your loan approval.

Find Your Dream Home in Lake Geneva with Kim & Joel Reyenga

Buying a home is an exciting journey, and having the right financing strategy makes all the difference. Whether you need guidance on mortgage options, pre-approval, or down payment assistance, Kim & Joel Reyenga of eXp Realty are here to help.