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Eliana
Eliana Williams Branch manager, Wells Fargo Home Mortgage View bio
Eldad Moraru
Scott Bice Director, HUD Homeownership Center (Denver) View bio
Wyman
Wyman Winston Executive director, Wisconsin Housing and Economic Development Authority View bio

If buying a first home seems like a daunting task, you are not alone. Purchasing a house is one of the largest – if not the largest — investments you’ll ever make. Fear not, though. There is a wealth of resources for first-time homebuyers, including many organizations in Wisconsin at the county, state and federal levels that can help with financial assistance and education. Among other things, programs offer eligible homebuyers financial assistance with down payments, closing costs and low-interest mortgage loans. This guide can help you with the ins and outs of buying a home in Wisconsin. Let’s begin by looking at the trend in mortgage rates in the Dairy State.

1

How Are Mortgage Rates in Wisconsin?

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Currently, mortgage rates in Wisconsin are just below the national average, but they can fluctuate due to competition in the area, state foreclosure rates, the cost of doing business, and the state’s individual laws. The state’s market conditions also can affect rates, including the track record of loan repayment by its residents. Wisconsin is on an upward economic trend and unemployment is falling, which may explain why current rates are slightly lower than the national average.

Still, it is primarily the borrower’s individual situation and property location that will have the most bearing on the interest rate for which the borrower qualifies.

Click here to find a centralized explanation of what drives mortgage rates in general.

2

Finding Homebuying Assistance in Wisconsin

Wisconsin offers a multitude of resources for homebuyers. There are state-level first-time homebuyer programs that assist with finances and educational courses through the Wisconsin Housing and Economic Development Authority (WHEDA). There also are federal outreach programs for mortgage help from the Federal Housing Authority (FHA), Veterans Administration (VA) and U.S. Department of Agriculture Rural Development.

Qualified buyers can find state programs offering reduced loan rates and financial assistance. WHEDA’s Advantage Home loan offers low cost, 30-year fixed interest rates and higher income and loan limits so more borrowers can qualify. In addition, WHEDA’s Easy Close Advantage loan is a 10-year low-interest loan for down payment, closing costs and home buyer education expenses. Qualified borrowers may even get tax credits of up to $2,000 annually to help reduce federal tax liability over the life of the loan.

Check out our comprehensive homebuyer’s guide for an in-depth explanation of the homebuying process.

Financial Assistance for First-Timers in Wisconsin

Look here to see what homebuying assistance your family could qualify for in Wisconsin.

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3

Wisconsin Home Affordability

Home values in Wisconsin are increasing and the economy seems to be on an upswing. According to the Wisconsin Realtors Association, the median home price overall in Wisconsin was $174,900 in June 2016. In the Milwaukee-Waukesha-West Allis area, the average home sales price rose 5.2 percent to $218,700 in Q4 2016 from the same period in 2015. Home affordability definitely depends on location, as well as the local economy, unemployment rates and median wages. Wisconsin’s average weekly wage as of September 2015 was $834, 14 percent lower than the national average of $974, according to the U.S Department of Labor. However, Wisconsin’s unemployment rate fell to 4.2 percent in June 2016 from 4.6 percent in the year-ago period.


Monthly Mortgage Payments in Wisconsin Depend on Rates and Home Prices

Metro Area Estimated Monthly Mortgage Payment* Q1 2016 (Change from Previous Year) 2015 Median Home Price 2014 2013
Appleton $651 $138,600 (+3.90%) $145,300 $143,900 $142,000
Fond du Lac $523 $111,500 (+15.40%) $123,500 $120,600 $118,300
Green Bay $655 $139,500 (+5.70%) $144,300 $146,600 $134,700
Madison $1,119 $238,400 (+5.40%) $238,000 $228,200 $221,500
Milwaukee-Waukesha-West Allis $976 $208,000 (+6.40%) $220,400 $207,800 $200,700
Minneapolis-St. Paul-Bloomington $1,046 $222,800 (+6.40%) $225,100 $210,100 $196,200
Oshkosh-Neenah $598 $127,500 (+1.90%) $131,000 $124,800 $125,600

Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.

4

Wisconsin’s Maximum Loan Limits

Yes, there are limits to what one can borrow for a home even if you make a lot of money. Some lenders offer “jumbo” loans, but guidelines for those are much stricter than conventional or Federal Housing Administration (FHA) loans. Conventional and FHA loans both have maximum loan amounts. FHA has to protect its losses with a maximum loan limit because it insures the loan is paid if the borrower defaults. And although conventional loans are not guaranteed or insured by the federal government, they follow guidelines of government-sponsored enterprises such as Fannie Mae or Freddie Mac. Check the table below for Wisconsin limits, which can vary from county to county.

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5

Tips for Home Buying in Wisconsin: Experts Weigh In

Eliana

Eliana Williams is a branch manager for Wells Fargo Home Mortgage in Milwaukee.

Scott

Scott Bice is director of the U.S. Department of Housing and Urban Development’s Denver Homeownership Center.

Wyman

Wyman Winston is executive director of the Wisconsin Housing and Economic Development Authority.

How is the housing market in Wisconsin right now?

Williams

Wisconsin’s housing market in the first half of 2016 was the strongest since before the Great Recession. Home sales in the first six months of this year were up 5.5 percent over the same period in 2015, and median prices were 4.5 percent higher. Every market in Wisconsin saw its sales grow. In June 2016, Wisconsin saw the highest median home price ($174,900) for that month since before 2005.

Bice

Prior to the housing crisis of 2008, the median home price peaked in Wisconsin during the second quarter of 2007 at $167,942. Median prices fell to $154,199 during the first quarter of 2009 before peaking in June 2016.

Winston

Tight inventories have fueled the upward pressure on prices. The supply of homes for sale is now 13.9 percent below the levels of one year ago. There would have been stronger sales in many areas of the state had there been more homes to buy.

What do first-time homebuyers in your state need to know about buying a home?

Williams

We find that some consumers have misconceptions about what it takes to buy a home, such as needing a 20 percent down payment or a very high credit score, and they assume they won’t qualify. But you may have more options than you realize – we encourage aspiring homeowners to talk to a lender about what options you may have.

Bice

They should learn all they can about home buying and the financing process. A HUD-Approved Housing Counseling Agency can help the homebuyer through the process by either providing one-on-one counseling or through a homebuyer education class. A housing counselor can assess credit habits and provide useful strategies to improve the odds of achieving homeownership.

Winston

Purchasing a home in the current low rate environment often provides ownership at less than the cost to rent.

Are there resources available to help with financial assistance?

Williams

While many (programs) are designed for specific circumstances, taking the time to learn about them and seek out resources available in many communities can help.

The Housing Cost Reduction Initiative provides up to $3,000 of assistance, which is forgivable after three years of residence. This may be a good option for those who can afford monthly mortgage payments on a home but don’t have quite enough for the upfront costs.

WHEDA (Wisconsin Housing and Economic Development Authority) provides a state bond program, working with mortgage lender partners to offer low down payment loan options. Interest rates are extremely low and they offer a special tax credit to borrowers who qualify. They also provide homebuyer education.

Bice

Housing Counseling agencies participating in HUD’s Housing Counseling Program are not permitted to charge consumers. However, housing counseling agencies are permitted to charge reasonable and customary fees for other forms of housing counseling and education services, provided certain conditions are met.

Winston

WHEDA offers flexible mortgage products with unique financing options that fit the individual needs of home buyers. First-time home buyers, veterans or people purchasing in a federally designated target area are eligible for a fixed-rate mortgage priced below the standard Conventional Advantage market rate. WHEDA Tax Advantage (is) a Mortgage Credit Certificate that allows a qualifying home buyer to claim a tax credit for a portion of the mortgage interest paid per year.

6

What Are the Closing Costs in Wisconsin

Closing costs are different in every state due to different laws and regulated rates. For example, some states require a real estate attorney to handle the mortgage closing, while others like Wisconsin do not, which saves money.

Title insurance is state regulated, so this varies, too. A title insurance policy in Wisconsin for a $150,000 loan policy would run $300 while in Minnesota, its neighbor to the west, the same policy would cost $100. Title insurance is just one of several third-party fees for services such as the closing, credit report, appraisal, survey and recording.

Average total closing costs in Wisconsin ($1,770) are about four percent less than the national average ($1,847) and almost the same as its neighboring state of Minnesota ($1,757), according to a 2015 Bankrate survey. (Bankrate’s survey reflects minimal third party costs such as credit report and appraisal fees.)

Lender origination fees in Wisconsin were $6 more than the national average while third-party fees were about 10 percent less than the national average. The state with the highest costs was Hawaii ($2,163), followed by New Jersey ($2,094) and Connecticut ($2,033). The states with the lowest costs were: Ohio ($1,613) then Wyoming ($1,689) and Utah ($1,697). Click here for a breakdown of common closing costs.

Average Closing Costs in Wisconsin

Average Origination
Fees
$1,047
Average Third-Party
Fees
$723
Average Total Closing
Costs
$1,770

Source: Bankrate’s 2015 survey of closing costs.

Mortgage Refinancing in Wisconsin

Current low interest rates nationwide can offer a lot of refinancing appeal to those holding a mortgage with higher rates. Low rates can result in some homeowners going to a 15-year mortgage from 30 years while maintaining nearly the same monthly payments, in some cases. Although some homeowners will benefit greatly, others may have been hit by the housing crisis and are just now regaining the original value of their home.

Federal Housing Finance Agency data shows refinancing in Wisconsin rose almost 30 percent from 2014 through 2015. Of the 88,506 refis in 2015, 4,564 or 6 percent of borrowers used the Home Affordable Refinance Program (HARP). This program was created in 2009 to help homeowners who were unable to refinance due to the drop in home values.

Wisconsin Mortgage Resources

Wisconsin Housing and Economic Development Authority is the state’s primary organization for housing assistance. It offers financial and educational assistance and other resources for home seeking and buying.

The U.S. Department of Housing and Urban Development’s programs geared towards homebuyers in Wisconsin offer financial and educational assistance.

The U.S. Department of Agricultural Rural Development offers homebuyers in Wisconsin help with obtaining loans and grants.

The NeighborWorks Blackhawk region offers assistance with home building, lending and homebuyer education for low- to moderate-income residents in priority neighborhoods.

NeighborWorks is also in the Green Bay area and provides residents with homebuyer education, counseling and other homeownership resources.

The city of Madison has first-time home buyer and home rehabilitation programs for its residents.

The City of Milwaukee offers many resources, loan programs, rehab funds and other incentives to buy city-owned homes.

The Neighborhood Housing Services of Southwest Wisconsin has a multitude of resources for homebuyers, including down payment loans, new construction programs and homebuyer education. It also offers home improvement loans and foreclosure prevention help.

The Appleton Housing Authority can help with a reduced rate, zero percent interest deferred payment loan for down payment assistance for qualified first-time homebuyers in Outagamie County. Loans can also be used for repairs or upgrades.

The city of Janesville offers up to $5,000 for down payment or closing costs for qualified first-time homebuyers within its city limits. It also has other loans to cover home improvements.

Dane County Housing Authority offers the Down Payment Assistance Program, which helps qualified first-time homebuyers who are at or below 80 percent of the county’s median income achieve homeownership in Dane County outside the City of Madison.