Jason Peters, senior vice president and mortgage loan manager for Arvest Bank – Greater Kansas City
Buy it, build it or boost it?
In today’s housing market, homeowners and potential buyers have been carefully considering all options regarding the next step in their homeownership journey. Should those in search of a new home buy or build? Or should homeowners consider renovating?
There is a lot to consider when making this decision, and the complexities and process can seem overwhelming. Here are a few things to consider.
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Buying a home
When buying a home, understanding which lending options are the best for your situation can feel overwhelming, especially in today’s rate environment. A mortgage lender can help explain the types of mortgage loans available to you, which, depending on eligibility, could include conventional, FHA, USDA and VA loans.
Yes, interest rates are higher than the historical lows from 2021 and before. It’s important to remember that interest rates are cyclical, and there’s a chance you could refinance to a lower rate later. So, look beyond the rate. Consider factors 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 ever have an insurance claim for damage in the future.
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Building a home
Getting caught up in the fun design details can be easy when building a home from the ground up, but the process requires careful planning and financial preparation.
Unlike traditional mortgages, construction loans are short-term loans that provide funds in stages as the building progresses. Understanding the draw schedule and inspection process is crucial to ensuring timely disbursements. Once the home is completed, the construction loan is often refinanced into a traditional mortgage that has a longer term.
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.
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Renovating a home
Whether you’re upgrading your current home or purchasing a fixer-upper, renovations can enhance both comfort and property value.
Depending on the scope and size of the project, homeowners have several financing options to consider, 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 borrowing period, typically 5 to 10 years. This makes it helpful for funding multiple home improvements or a variety of needs. 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.
Another option is to take advantage of a rehab loan, which can help finance the purchase of a home and the renovation together with one single mortgage.
Whether you’re buying, building or “boosting” a home, you can turn your vision into reality by making informed choices and working with the trusted professionals at Arvest Bank.
Jason Peters, NMLS # 402102, is a senior vice president and mortgage loan manager for Arvest Bank – Greater Kansas City and can be reached at japeters@arvest.com.
With more than $27 billion in assets, Arvest is a full-service bank that delivers financial solutions to individuals and businesses of all sizes. Since entering the Kansas City market in 2009, Arvest has grown to a top 20 bank and the sixth largest mortgage lender in the metro. The bank has 20 locations in the metro area, including eight branches in Johnson County. Arvest is an Equal Housing Lender and Member FDIC.
