Buyer – The Korwels Team

The Ultimate Guide to Home Financing

Debunking the Myths and Securing Your Future

Entering into 2026, the housing market has reached a new stage of maturity. While the frenzy of previous years has cooled, a different kind of challenge has emerged: misinformation. Even for those who have owned homes before, the mortgage landscape has shifted significantly, and old “rules of thumb” no longer apply.

If you are looking to purchase a home this year, your greatest asset isn’t just your down payment—it is your information. By clearing up common misconceptions early, you can move forward with the confidence to seize opportunities that others might miss.

Here is the truth behind the most common mortgage myths as we navigate the path to homeownership today.

Myth 1: You Need a 20 Percent Down Payment

The “20% down” rule is perhaps the most persistent myth in real estate. While putting 20% down is a great way to eliminate Private Mortgage Insurance (PMI) and lower your monthly payment, it is by no means a requirement.

The Reality for 2026 Buyers:

Today’s loan programs are designed to help you get into a home sooner without draining your entire life savings.

FHA Loans: Allow for a down payment as low as 3.5%.
Conventional Loans: Many options exist for as little as 3% down.
VA and USDA Loans: If you are a veteran or buying in a qualifying rural area, you may be eligible for 0% down.
Down Payment Assistance (DPA): Many lenders offer specialized programs or work with state agencies to provide grants or secondary loans that cover the down payment entirely, making 100% financing a reality for qualified buyers.

In Wisconsin, the Wisconsin Housing and Economic Development Authority (WHEDA) provides specialized loan programs and down payment assistance that can cover up to 6% of your purchase price, effectively allowing for 100% financing for qualified buyers. These programs offer flexible credit guidelines and reduced mortgage insurance costs, making homeownership in Wisconsin significantly more affordable than traditional financing.

Myth 2: You Need Perfect Credit to Qualify

Many potential buyers stay in the rental cycle because they believe their credit score isn’t “perfect” enough for a mortgage. While a higher score can help you secure a lower interest rate, a “fair” score is not a dealbreaker.

The Reality of Credit Flexibility:

Lenders have become increasingly sophisticated in how they view creditworthiness.

FHA programs are specifically designed for those with less-than-perfect credit.
Credit Counseling: Most reputable lenders offer resources to help you understand how your score impacts your rate and can guide you on how to improve your profile.
The Early Check: It is always better to know your standing early. Getting a clear picture of your credit profile months before you want to buy gives you time to make small adjustments that could save you thousands over the life of the loan.

Myth 3: Pre-Approval is a Guaranteed Loan

It is a common mistake to think that once you have a pre-approval letter in hand, the financing is a “done deal.” In reality, a pre-approval is an estimate of what you can borrow based on an initial review of your finances.

The Path to Full Approval:

Final loan approval depends on a process called underwriting, which happens after you find a home.

Keep it Consistent: Once you are pre-approved, avoid making large purchases (like a new car), changing jobs, or moving large sums of money between accounts.
Verified Pre-Approvals: Look for lenders who offer “fully underwritten” pre-approvals. This means a human underwriter has already reviewed your files, giving you a massive advantage when you find “the one.”

Myth 4: All Mortgages Are Basically the Same

Choosing a mortgage is not like buying a gallon of milk; it is a strategic financial decision. The “structure” of your loan—how long it lasts and how the interest is calculated—can change your financial life for years to come.

Your Options Include:

Fixed-Rate Mortgages: Your payment stays the same for 15 or 30 years.
Adjustable-Rate Mortgages (ARMs): Often offer a lower initial rate for a set period, which can be a smart move if you plan to move or refinance in a few years.
Specialized Products: For investors, DSCR (Debt Service Coverage Ratio) loans allow you to qualify based on the property’s potential rental income rather than your personal salary.
Lender-Specific Incentives: Many modern lenders now offer programs that reduce or eliminate traditional fees like origination or processing to stay competitive.

Myth 5: Always Chase the Lowest Interest Rate

It is tempting to shop around for the single lowest percentage point you can find. However, the “lowest rate” advertised online often comes with hidden costs.

What to Look For Instead:

Closing Costs and Points: Some lenders offer a low rate but charge high “points” (upfront fees) to get it. You might pay $5,000 today just to save $20 a month—it could take you decades to break even.
The Total Cost: Look at the APR (Annual Percentage Rate), which reflects the true cost of the loan including fees.
Flexibility: Does the loan allow for a future refinance without heavy penalties? A trusted loan officer will provide a side-by-side comparison so you can see the long-term trade-offs.

Myth 6: It Is Better to Wait Until Rates Drop

Many people are sitting on the sidelines entering into 2026, waiting for a dramatic drop in interest rates. While it is natural to want the lowest rate possible, “waiting for the bottom” can be an expensive mistake.

The Strategy of “Date the Rate, Marry the House”:

Equity Growth: While you wait for a 1% drop in rates, home prices may continue to rise. You might save on interest but end up paying significantly more for the house itself.
Refinance Later: If you buy now, you begin building equity immediately. If rates drop later, you can refinance into a lower rate. If rates go up, you’ll be glad you locked in today’s price.

Ready to see what’s possible for you?

The biggest obstacle to buying a home isn’t usually the bank—it’s the myths that stop you from starting the conversation. When you have the facts, you make stronger decisions.

There are more pathways to homeownership today than most people realize, from zero-down programs to credit-flexible financing. The key is to stop guessing and start planning.

Don’t let mortgage myths hold you back from your goals. Whether you are a first-time buyer or a seasoned investor, we are here to help you navigate the numbers.

Contact us today to talk through your specific situation. We can sit down for a detailed consultation or introduce you to one of the highly recommended loan officers we partner with. They specialize in finding the right fit for your unique financial profile, ensuring your path to homeownership is as smooth as possible.

Buyer

A Basic Guide to Wisconsin Forest Management

Whether you’re selling your current home or searching for your dream property, Wisconsin’s beautiful woodlands add incredible value. As your local real estate specialists, we want to introduce you to a powerful resource that can benefit both buyers and sellers: Wisconsin Forest Management Programs.

🏡 For Home Sellers: Boost Your Listing’s Appeal

If your property includes woods, a history of forest management isn’t just a nice detail—it’s a major selling point. It shows buyers you’ve been a responsible steward of the land.

The Seller Advantage:

Higher Perceived Value: Buyers look for healthy, well-maintained land. A Forest Management Plan demonstrates proactive care, which can directly translate to a better asking price.
Tax Benefit Transfer: If your property is enrolled in the Managed Forest Law (MFL) program, you can advertise the existing property tax reduction. This financial incentive is extremely attractive to potential buyers.
Clear Documentation: Having a plan in place, showing which trees were thinned or harvested and when, gives buyers confidence in the long-term health and value of the timber.

🌳 For Home Buyers: Investing in a Healthy Future

Buying property with acreage means you’re inheriting a forest. Understanding management programs allows you to maximize the enjoyment and financial benefits of your new home.

The Buyer Benefit:

Reduced Property Taxes: If the property is already in the Managed Forest Law (MFL) program, you’ll inherit the tax reduction, making your annual carrying costs lower. This is a significant factor in your overall budget!
A Healthy Investment: A managed forest is generally more resilient to pests (like the Emerald Ash Borer) and disease. You’re buying a piece of property that has been actively protected and maintained.
Guidance is Available: You don’t need to be a lumberjack to be a forest owner. These programs connect you with professional foresters who will help you decide how to manage your woods to meet your goals, whether that’s wildlife habitat, timber value, or recreation.

The Key Program: Managed Forest Law (MFL)

The most important program for private landowners in Wisconsin is the Managed Forest Law (MFL).

What it is: MFL is a private landowner program that provides a property tax break in exchange for following a written plan for sustainable forestry. Landowners agree to manage their woods for timber production, wildlife habitat, and water quality for a period of 25 or 50 years.

Key Takeaways:

Tax Reduction: This is the primary incentive. Land enrolled in MFL pays substantially less in property taxes than comparable non-enrolled land.
Professional Plan: You work with a certified forester to create a plan tailored to your woods and your personal goals.
Transferable: The contract is generally transferred to the new owner when the property is sold. This is why it’s so important for both buyers and sellers to be aware of the program status!

Your Next Steps

Ready to explore how forest management can affect your buying or selling decisions? Here are the best resources to get started:

For Basic Information:

Wisconsin DNR Forest Management Programs: Find comprehensive details on MFL, forestry best practices, and local assistance.
- DNR Forest Management Programs
- Managed Forest Law (MFL) Overview

For Professional Help:

DNR Cooperating Forester List: Use this tool to find a local professional who can walk you through the MFL application process or help you with a management plan.
- Find a Cooperating Forester or DNR advisor

Whether you’re prepping your wooded property for sale or are considering purchasing a home with acreage, knowing the status of any forest management plan is critical. Don’t leave money or value on the table!

Contact us today! Let’s unlock the full financial and environmental potential of Wisconsin land. 🌲

Buyer

New Build vs. Resale: Perfect Home For You

The dream of homeownership comes in many forms, and for many buyers, a key decision looms large: should you buy a brand-new home or opt for a pre-loved “resale” property? While the answer isn’t always straightforward, understanding the pros and cons of each can help you make an informed choice.

Interestingly, as of June 2025, the median price of an existing home is nearly on par with a new build, according to the National Association of Home Builders. This means your decision no longer boils down solely to affordability, but rather to what truly fits your lifestyle and preferences.

Let’s break down what to consider for each option:

The Charm of a Resale Home: History, Location, and Less Decision Fatigue

Existing homes, or resale properties, are the most common choice for Americans, accounting for over 90% of total home purchases. There’s a lot to love about them:

Pros:

Character and History: Resale homes often boast unique architectural styles and a sense of history that new builds simply can’t replicate. With nearly half of America’s housing stock being over 40 years old, you have a vast inventory of distinctive homes, from Victorian to Craftsman.
Established Communities: Existing homes are typically located in mature neighborhoods with established amenities, schools, and infrastructure. You won’t have to wait years for local services or a vibrant community to “gain its footing.”
Less Design Stress: If you find decision-making overwhelming, a resale home can be a godsend. Instead of choosing every single finish, fixture, and floor plan detail, you can simply select a home that already meets your basic needs.
Faster Move-In: Generally, buying an existing home can be quicker than building from the ground up. Even extensive remodels, as custom builder Sean Sullivan points out, can sometimes be completed faster because you’re not starting with a raw foundation.

Cons:

Outdated Designs/Layouts: While charming, older homes often feature compartmentalized floor plans, which might not align with today’s popular open-concept living.
Potential for Repairs/Updates: Older homes can come with unexpected maintenance issues (think plumbing, electrical, or HVAC) and may require costly remodels to bring them up to modern standards and efficiency. This “hidden” cost can add up, even if you tackle projects piece by piece.
Compromise on Features: You might have to adjust your expectations and “fit” into an existing home’s design rather than having a home perfectly tailored to your desires.

The Allure of a New Build: Modernity, Customization, and Peace of Mind

Despite existing homes dominating the market, a recent NAHB survey found that 61% of buyers prefer a new home. This isn’t surprising given the compelling advantages of a fresh start.

Pros:

Modern Design & Functionality: New homes are built with contemporary lifestyles in mind. Modern homes are designed with open floor plans and modern finishes, a stark contrast to older, more isolated kitchen layouts and many small rooms/areas.
Customization (for custom builds): If you’re building a custom home, you have the ultimate freedom to choose everything from the layout to the smallest design details, creating a space that perfectly reflects your taste and needs. Even production builders offer a range of selections for design.
Latest Building Codes & Materials: New homes are constructed to the most current building codes, using modern, energy-efficient materials like double-pane windows. This often translates to better performance, lower utility bills, and fewer immediate maintenance concerns. You’ll be the first to use all appliances and fixtures, and you won’t immediately worry about a leaky roof or a failing water heater.
Community Potential: While new subdivisions might start with dirt yards and fewer established amenities, they often foster a strong sense of community as new neighbors, all starting fresh, are often keen to connect.

Cons:

Time-Consuming Process: Building a new home, especially a custom one, can be a lengthy process involving design, permits, construction, and potential delays. It requires patience and active involvement.
Undeveloped Neighborhoods: New developments, while meticulously planned by builders, may take time to fully mature. You might be moving into an area that’s still under construction, lacking established landscaping or neighborhood services for a while.
Smaller Footprints (for production builds): Due to affordability challenges, many new production homes today are smaller than in years past. If you’re looking for a very large house (e.g., 3,000+ square feet), it might be harder to find a new build that’s move-in ready compared to an existing large home.
It Becomes “Used” Quickly: A newly built home becomes an “existing home” as soon as the first owner lists it for sale, limiting its unique “new” status over time.

What’s Right for You?

The choice between a new build and a resale home ultimately depends on your priorities, lifestyle, and willingness to embrace either the charm of the past or the promise of the future. Consider your desire for customization, your budget for potential renovations, your timeline for moving, and the type of community you envision yourself in.

Ready to explore your options? Whether you’re dreaming of a custom-built masterpiece or a charming vintage home, I can help you navigate the available housing stock in your desired area. Let’s find the perfect place for you to call home!

Buyer

Understanding Mortgage Rates: A Look Back and What It…

For anyone looking to buy a home, understanding mortgage rates is absolutely crucial. These rates can significantly impact your monthly payments and the total cost of your home over the life of your loan. As your trusted real estate partner, I want to shed some light on the history of mortgage rates, what influences them, and what this means for you in today’s market.

A Historical Perspective: Riding the Rate Rollercoaster

Mortgage rates haven’t always been as they are today. Over the decades, they’ve experienced significant swings, influenced by economic events, government policies, and global factors.

Looking back, the late 1970s and early 1980s saw historically high mortgage rates, sometimes reaching double digits as the Federal Reserve battled high inflation. Imagine borrowing money for a home at 15% or even 18%! And yet people did it.

As inflation was brought under control, rates gradually declined throughout the 1990s and into the early 2000s, making homeownership more accessible. The period following the 2008 financial crisis saw rates plummet to historic lows as the government tried to stimulate the economy.

In more recent years, we’ve seen rates fluctuate again, influenced by factors like economic growth, inflation concerns, and the Federal Reserve’s monetary policy.

For the most recent graph, just click here: https://fred.stlouisfed.org/series/MORTGAGE30US#

The Simple Truth: What Makes Rates Go Up and Down?

While the intricacies of the financial markets can be complex, the basic factors influencing mortgage rates are quite straightforward:

The Economy: A strong, growing economy can sometimes lead to higher interest rates as demand for borrowing increases. Conversely, during economic slowdowns, rates may decrease to encourage borrowing and spending.
Inflation: When the cost of goods and services rises (inflation), interest rates, including mortgage rates, tend to follow suit to compensate lenders for the decreasing purchasing power of future payments.
Federal Reserve Policy: The Federal Reserve (often called the “Fed”) plays a significant role in influencing interest rates through various tools, including adjusting the federal funds rate. While the Fed doesn’t directly set mortgage rates, its actions have a ripple effect throughout the economy.
The Bond Market: Mortgage rates are closely tied to the bond market, particularly the yield on U.S. Treasury bonds. When bond yields rise, mortgage rates often follow, and vice versa.
Investor Demand: The appetite of investors for mortgage-backed securities also plays a role. Higher demand can sometimes lead to lower rates, while lower demand can push rates up.

Think of it like a seesaw: when the economy is strong or inflation is high, the seesaw tips towards higher rates. When the economy slows down or inflation is low, it often tips towards lower rates.

Today’s Market and Your Future Home

Understanding the history and the basic drivers of mortgage rates helps us contextualize the current market. Rates today are influenced by a unique combination of these factors, and staying informed is key for any prospective homebuyer.

This brings me to you, the future homeowner. Considering the current economic landscape and the historical context we’ve discussed:

What mortgage rate would you consider a comfortable and motivating point to make your move and purchase your dream home?

I’d love to hear your thoughts! Let’s discuss your individual circumstances and navigate the current market together to find the perfect property and the right financing options for you.

Ready to take the next step? Contact me today for a personalized consultation! Let’s turn your homeownership dreams into a reality.

Buyer

Homeowners Associations: A Double-Edged Sword

Homeowners Associations (HOAs) are increasing in the United States, shaping the landscapes of many neighborhoods. They are the most popular in Florida, California and Colorado, where over 60% of properties are part of HOA. In Wisconsin, it’s just about 19%.

HOAs offer a unique blend of benefits and drawbacks, making it essential for potential homeowners to understand their implications.

A Brief History of HOAs

The concept of HOAs traces its roots back to the early 20th century, emerging as a response to urban sprawl and the need for community governance. Initially, HOAs primarily focused on maintaining property values and ensuring aesthetic uniformity within neighborhoods. However, over time, their role has expanded to encompass a wider range of responsibilities, including:

Community Maintenance: HOAs often oversee the upkeep of common areas like parks, pools, and landscaping. With this, they take over for the owners chores like lawn mowing and snow removal.
Enforcing Rules and Regulations: They establish guidelines regarding property maintenance, architectural styles (often regulating details like color of siding, type and height of a fence etc.), and even noise levels.
Providing Amenities: Some HOAs offer additional amenities such as clubhouses, fitness centers, or security services.

The Cost of Belonging

One of the most significant considerations for potential homeowners is the financial impact of HOA fees. These fees vary widely depending on the specific HOA, location, and the level of services provided. On average, HOA fees can range from a few hundred dollars to several thousand dollars per year. Not surprisingly, the highest HOA membership fees are paid by home owners in Alabama, on average almost 5,500/year, with Wisconsin average being “only” $4,000/year on average.

While HOA fees may seem burdensome, it’s important to weigh the costs against the benefits. By maintaining property values and providing amenities, HOAs can contribute to a more desirable living environment. However, it’s crucial to carefully review the HOA’s budget and financial history to ensure that fees are being used responsibly.

The Pros and Cons of HOA Living

Pros:

Enhanced Property Values: HOAs can help maintain property values by enforcing consistent standards and investing in community improvements.
Community Amenities: HOAs often provide access to shared amenities like pools, fitness centers, and clubhouses.
Security: Some HOAs offer security services, such as gated communities or 24/7 surveillance.
Sense of Community: HOAs can foster a strong sense of community through social events and volunteer opportunities.

Cons:

Strict Rules and Regulations: HOAs may impose restrictive rules on homeowners, limiting their freedom to modify their properties.
Increased Costs: HOA fees can add to monthly expenses and may increase over time.
Potential for Conflict: Disagreements between homeowners and the HOA board can arise, leading to tension and legal disputes.
Lack of Privacy: In some cases, HOAs may have the authority to monitor residents’ activities.

Making an Informed Decision

When considering a home within an HOA community, it’s essential to conduct thorough research and ask the right questions:

Review the HOA’s Governing Documents: Understand the rules, regulations, and financial obligations.
Inquire About Fee Structure: Learn about the current fees and any potential increases.
Assess the HOA’s Financial Health: Review the budget and reserve funds to ensure long-term sustainability.
Attend HOA Meetings: Participate in meetings to gain insights into the board’s decision-making process.
Talk to Current Residents: Get firsthand accounts of the HOA’s strengths and weaknesses.

By carefully evaluating the pros and cons, potential homeowners can make informed decisions about whether HOA living is the right choice for their lifestyle and financial situation.

Buyer

All about home inspection

The Importance of a Home Inspection

Buying a home is a significant investment, and a home inspection is a crucial step in the process. It provides valuable insights into the property’s condition and potential issues, helping you make informed decisions about your purchase.

Why a Home Inspection Matters

Identifying Structural and Safety Concerns: A home inspector will thoroughly examine the property’s foundation, framing, roof, electrical system, plumbing, and heating/cooling systems. They can identify potential structural weaknesses, safety hazards, and code violations that may not be visible to the untrained eye.
Assessing the Overall Condition: The inspector will evaluate the general condition of the property, including the interior and exterior finishes, appliances, and overall maintenance. This information helps you understand the property’s age, wear and tear, and any necessary repairs.
Budgeting for Repairs and Maintenance: Knowing the property’s condition allows you to budget for potential repairs and maintenance costs. This helps you avoid unexpected expenses after closing.
Negotiating Power: If the inspection reveals significant issues, you can use this information to negotiate a lower purchase price or ask the seller to make repairs before closing.
Peace of Mind: A thorough home inspection can provide you with peace of mind knowing that you’re making an informed decision about your investment.

What Does a Home Inspection Typically Cover?

A standard home inspection typically covers the following areas:

Foundation: Checks for cracks, water damage, and other structural issues.
Roof: Assesses the roof’s condition, including any leaks, missing shingles, or other damage.
Plumbing: Evaluates the plumbing system for leaks, water pressure issues, and the condition of pipes and fixtures.
Electrical System: Tests the electrical system, including outlets, switches, and wiring.
Heating and Cooling System: Checks the condition of the HVAC system, including the furnace, air conditioner, and duct work.
Attic and Crawl Space: Inspects the attic and crawl space for insulation, ventilation, and signs of pests or water damage.
Interior: Assesses the condition of walls, floors, ceilings, and cabinets.

How Much Does a Home Inspection Cost?

The cost of a home inspection varies depending on several factors, including:

Size of the Home: Larger homes typically require more time to inspect, which can increase the cost.
Age of the Home: Older homes may have more potential issues, which can also increase the cost.
Location: Home inspection costs can vary by region.
Inspector’s Experience: More experienced inspectors may charge higher rates.
Specific Services Included: Some inspectors offer additional services, such as radon testing or mold inspection, which can add to the cost.

Typically, you can expect to pay between $300 and $500 for a home inspection. However, some inspections may cost more, especially for larger or more complex properties.

Who Pays for the Home Inspection?

Traditionally, the buyer is responsible for paying for a professional home inspection. However, there are some exceptions and nuances to consider.

Buyer Pays: In most cases, the buyer assumes the cost of the home inspection to ensure the property’s condition before purchasing.
Seller Pays: Sometimes, sellers may offer to pay for a home inspection as an incentive to attract buyers, especially if the home has been on the market for a while or has known issues.
Negotiation: The cost of the home inspection can sometimes become a negotiation point during the offer process. Buyers may include the cost of the inspection as part of their offer, and sellers may agree to pay for it or negotiate a lower price.

How to Schedule a Home Inspection

Once you’ve found a home you’re interested in, you can schedule a home inspection with a certified inspector. Be sure to choose an inspector who is licensed and insured.

When scheduling the inspection, you’ll need to provide the inspector with the following information:

Property Address: The inspector will need to know the address of the property to be inspected.
Access to the Property: The inspector will need access to all areas of the property, including the attic, crawl space, and basement.
Any Known Issues: If you’re aware of any existing problems with the property, be sure to let the inspector know.

What to Do After the Inspection

After the inspection, you’ll receive a detailed report outlining the inspector’s findings. The report will include any potential issues and recommendations for repairs.

If the inspection reveals significant problems, you may want to negotiate a lower purchase price or ask the seller to make repairs before closing. You may also want to get quotes from contractors to determine the cost of repairs.

Conclusion

A home inspection is an essential part of the home buying process. By investing in a home inspection, you can protect yourself from costly repairs and ensure that you’re making a sound investment.

Additional Tips for Home Buyers

Do Your Research: Before you start looking at homes, do your research and learn about the different types of home inspections available.
Get Multiple Quotes: Get quotes from several different inspectors to compare prices and services.
Be Present During the Inspection: If possible, be present during the inspection (and ask your agent to accompany you) so you can ask questions and learn more about the condition of the home.
Don’t Be Afraid to Ask Questions: If you have any questions about the inspection process or the inspector’s findings, don’t be afraid to ask.

By following these tips, you can ensure that you’re making an informed decision about your home purchase.

Buyer

Navigating Wisconsin’s New Real Estate Landscape

Real estate market has recently undergone significant changes, impacting the home-buying process. Here’s a breakdown of the key updates as they relate to Wisconsin real estate transactions that you need to be aware of.

Mandatory Written Documents

Before viewing a property, buyers in Wisconsin are now required to sign one of three written documents:

Agency Agreement: This agreement establishes a formal relationship between the buyer and their real estate agent, outlining the agent’s fees as well as their duties and responsibilities.
Disclosure to Customers: This document provides information about the agent’s limited duties with no agency agreement. Agent does not represent buyer in the transaction, they only fill out contract per buyers instruction and cannot provide any advise.
Pre-Agency Showing Agreement: This agreement is used when a buyer is considering working with an agent but hasn’t yet made a final decision. Agent cannot provide advise or fill out contract until buyer decides if he wants to work with agent.

Buyer Responsibility for Agent Commission

It’s important to understand that buyers are responsible for paying their real estate agent’s commission. However, buyers can request sellers to provide a credit towards the cost of their agent commission. This is known as a seller concession and can be negotiated during the offer process, along with purchase price and other terms.

Conclusion

Navigating the Wisconsin real estate market can be exciting but also challenging. With the recent changes to the home-buying process, it’s more important than ever to have a knowledgeable and experienced real estate team by your side.

The Korwels Team is here to help you every step of the way. Our team of dedicated professionals can provide expert guidance, negotiate on your behalf, and ensure a smooth home-buying experience.

Ready to get started?

Contact The Korwels Team today to schedule a consultation and learn how we can help you find your dream home in Wisconsin.

Buyer

Pre-qualified or pre-approved?

Which one when?

When embarking on the journey of purchasing a home, understanding the distinctions between pre-qualification and pre-approval is crucial. These two terms often get used interchangeably, but they represent different stages in the homebuying process – and different levels of scrutiny. Let’s delve into the details to help you make informed decisions.

Pre-Qualification: The Initial Step

Pre-qualification is a preliminary assessment that provides a rough estimate of the loan amount you might be eligible for. It’s a relatively informal process that typically involves a brief conversation with a lender or completing an online questionnaire. Lenders will generally ask about your income, debt, and credit history to get a sense of your financial situation.

Key Points About Pre-Qualification:

Informal assessment: Doesn’t involve a thorough credit check.
Estimate: Provides a general idea of your borrowing capacity.
Early stage: Often a starting point in the homebuying process.
No commitment: Doesn’t guarantee loan approval.

Benefits of Pre-Qualification:

Helps set a budget: Gives you a better understanding of your price range.
Streamlines the process: Can expedite the homebuying journey.
Enhances your negotiating position: Shows sellers you’re a serious buyer.

Pre-Approval: A More Formal Commitment

Pre-approval is a more rigorous process that involves a comprehensive review of your financial information, including a credit check. It’s a stronger indication of your creditworthiness and ability to secure a loan. Lenders will typically require documentation such as tax returns, pay stubs, and bank statements.

Key Points About Pre-Approval:

Formal process: Involves a thorough credit check.
Conditional approval: Subject to the property appraisal and verification of income.
Stronger commitment: Shows sellers you’re a serious buyer with financing in place.
Rate lock option: May allow you to lock in an interest rate for a specific period.

Benefits of Pre-Approval:

Increases your chances of success: Demonstrates to sellers that you’re a qualified buyer.
Streamlines the closing process: Can expedite the transaction.
May offer better interest rates: Lenders may provide more favorable terms to pre-approved buyers.

When to Get Pre-Qualified and Pre-Approved

Pre-Qualification:

Early in the homebuying process: If you’re just starting to explore your options.
To get a sense of your budget: Before starting your home search.

Pre-Approval:

When you’re ready to make an offer: To demonstrate your financial capability to sellers.
To lock in an interest rate: If you’re concerned about rising interest rates.

Factors Affecting Pre-Qualification and Pre-Approval

Several factors can influence your pre-qualification and pre-approval status, including:

Credit score: A higher credit score generally leads to better terms.
Debt-to-income ratio: A lower debt-to-income ratio improves your chances of approval.
Income: Higher income can increase your borrowing capacity.
Employment stability: A steady job history is beneficial.
Down payment: A larger down payment can reduce your loan amount and improve your chances of approval.

Choosing the Right Lender

Selecting the right lender is crucial to the pre-qualification and pre-approval process. Consider the following factors when making your decision:

Reputation: Choose a reputable lender with a track record of customer satisfaction.
Rates and fees: Compare interest rates and closing costs from different lenders.
Terms and conditions: Understand the loan terms and any associated fees.
Customer service: Look for a lender that provides excellent customer support.

Additional Tips

Start early: Begin the pre-qualification or pre-approval process well before you start your home search.
Get organized: Gather all necessary documentation, such as tax returns, pay stubs, and bank statements.
Shop around: Compare offers from multiple lenders to find the best terms.
Be transparent: Provide accurate information to your lender to avoid delays.
Consider a pre-approval lock: If you’re concerned about rising interest rates, consider locking in your rate.

By understanding the differences between pre-qualification and pre-approval, you can make informed decisions and increase your chances of successfully purchasing a home. Remember, these are essential steps in the homebuying process, so take the time to research and choose the best options for your specific needs.

Contact us today if you have additional questions – we can also suggest some local lenders we work with and trust to guide you through the process.

Buyer

Home Sweet Tax Breaks

Advantages of home ownership explained

Homeownership offers a multitude of tax advantages that can significantly impact your bottom line.

One of the most well-known benefits is the mortgage interest deduction. If you itemize deductions, you can typically subtract the interest paid on your home loan from your taxable income. Similarly, property taxes, which are often substantial, can also be deducted.

Another key factor is capital gains, which is the profit realized from selling an asset—in this case, your home. While capital gains can be subject to taxation, homeowners can strategically reduce their tax liability by understanding capital improvements. Those permanent additions or alterations to your home increase its value or prolong its life. Examples include adding a new room, upgrading the kitchen, or replacing the roof. These expenditures increase your home’s tax basis—the original purchase price plus the cost of improvements. A higher tax basis means a lower capital gain when you sell. Just by carefully documenting capital improvements and maximizing your home’s tax basis, you can potentially shield a significant portion of your sale proceeds from capital gains taxes.

For homeowners who use a portion of their residence exclusively and regularly for business purposes, the home office deduction can provide valuable tax relief. This deduction covers a percentage of your home’s expenses, including utilities, insurance, and depreciation, based on the square footage allocated to your home office.

Furthermore, making your home more energy-efficient can not only save you money on utility bills but also potentially qualify you for energy tax credits. These credits are offered to encourage homeowners to adopt environmentally friendly practices and reduce their carbon footprint.

By understanding and maximizing all of these tax advantages, homeowners can transform their property into a valuable financial asset.

Disclaimer: Tax laws are subject to change, and the deductibility of these items can vary based on individual circumstances. It’s essential to consult with a tax professional for personalized advice.

Buyer

Tips for Unmarried Couples Buying a House

For unmarried couples, the excitement of buying a home can be tinged with a bit of uncertainty. Fear not! With some careful planning and knowledge , you can navigate the process smoothly and build a secure nest together.

Understanding Title Ownership: You Say Yours, I Say Ours

One of the key differences unmarried couples face compared to married couples is the lack of automatic legal protections. This is especially true when it comes to ownership of the property. Here, you’ll need to decide how you want to hold the title, essentially determining how you own the house:

Joint Tenancy with Right of Survivorship: This is the simplest option. Both partners own the property equally, and if one partner passes away, the other automatically inherits their share. This avoids probate, a lengthy and costly legal process that determines how assets are distributed after death. Sounds perfect, right? Well, it’s important to understand that both partners have equal rights to the property, meaning either can sell their share without the other’s consent.
Tenancy in Common: This option offers more flexibility. Each partner can own a different percentage of the property, based on their down payment contribution, for example. You can also designate who inherits your share upon death through a will. This might be useful if one partner contributes significantly more financially. However, tenancy in common does not include the right of survivorship. If one partner dies without a will, their share may go to their legal heirs, which could potentially be someone other than your partner.

Choosing the Right Title:

Deciding how to hold title depends on your specific circumstances and long-term goals. Here are some factors to consider:

Financial Contribution: Did one partner contribute a larger down payment? Tenancy in Common allows you to reflect that contribution in ownership percentages.
Future Plans: Do you plan to have children or get married in the future? Joint tenancy with right of survivorship might be simpler, but discuss how future life changes could impact your decision.

Remember, this is a crucial decision. Consulting with a local real estate attorney is highly recommended. They can explain the legal implications of each option within the context of your state’s laws and help you choose the title structure that best suits your needs.

The Mortgage Maze: Two Hearts, One (or Two) Mortgages?

Getting pre-approved for a mortgage is an essential first step in the home-buying journey. However, as an unmarried couple, there are some additional things to keep in mind:

Joint Mortgage Eligibility: Both your credit scores, income, and debt-to-income ratios will be considered to determine your borrowing power.
- Credit Scores: The lower of your two credit scores will often affect the loan terms you qualify for, including the interest rate. Discussing credit improvement strategies and working towards a healthier credit score together can be beneficial.
- Income Verification: Combined income determines the maximum loan amount you can qualify for.
- Debt-to-Income Ratio: This ratio shows the lender how much debt you carry compared to your income. A lower ratio (typically below 36%) indicates a better ability to manage mortgage payments.
Applying for a Mortgage as Unmarried Partners: Be transparent with the lender about your relationship status. This could affect the loan agreement. Have all necessary documents ready, such as proof of income, employment verification, and identification for both partners.

Beyond the Bricks and Mortar: Protecting Your Nest Egg

While love is the foundation of any relationship, legal agreements can provide much-needed peace of mind. Consider these two options:

Cohabitation Agreement: This outlines who owns what assets and how finances will be handled if the relationship ends. It can address things like furniture, appliances, and even shared bank accounts.
Property Agreement: Similar to a prenuptial agreement, this specifies each partner’s financial contribution to the property and how it should be divided upon separation or death. This can be particularly important if one partner contributes significantly more financially towards the down payment or renovations.

These agreements can prevent disagreements and potential legal battles down the road. Remember, a real estate attorney can help draft these documents properly to ensure they are legally binding.

This post has explored the key considerations for unmarried couples buying a house, from understanding title ownership and navigating the mortgage process to implementing legal protections like cohabitation agreements and property agreements. Remember, seeking guidance from a real estate attorney is invaluable throughout the journey.

So, are you ready to turn your dream of homeownership into a reality? Contact us today! We can help you navigate the process from start to finish, ensuring a smooth and stress-free experience. Let’s build your dream home together, on a foundation of love, planning, and legal security.