The Wisconsin Buying Process: A Summary
- The homebuying process in Wisconsin is usually overseen by an attorney or title agency.
- Although a purchase price has been reached, there are details that need your attention, such as inspections and repairs to the property.
- You’ll need to send a variety of documents to the lender before your Wisconsin mortgage is officially approved.
- Buyers and seller often come together to close the sale at the same table.
- The entire state of Wisconsin is under the base limits, which is $647,200 for a single-family home.
Phase 1: Negotiations in Wisconsin
Although you have come to an agreement on purchase price and had your offer accepted, there are still a few details that need to be worked out before the Wisconsin purchase is complete.
- First, your offer will be accepted and a contract will be signed by you and the seller, committing both parties to the purchase.
- You’ll have to pay “earnest money,” which is held in escrow and shows your true intention to make the purchase.
- The signed contract is sent to an attorney or title company to begin the title search. This simply ensures that there are no ownership complications and the seller is free and clear to sell the Wisconsin property.
- You will need to review and sign off on all disclosures. These are simply statements from the seller of known issues with the property, such as past repairs, needed improvements, or environmental issues. Review these carefully, as they will provide important information on your purchase.
- You can now complete any inspections. In Wisconsin, a general inspection is usually recommended. If needed, inspections for lead paint, mold, radon, and pests may also be required.
- If you find any issues that were not disclosed by the seller, you can request changes to the contract. This may include a reduction in price. You can also ask the seller to repair the issue before making the purchase. Negotiations usually continue until an agreement is reached.
- You may also request a home warranty, which covers the cost of appliance repairs for a given period, usually about 12 months.
Phase 2: The Wisconsin Mortgage Process
In this part of the Wisconsin buying process, you will formally and officially finalize the loan. While fairly simple, this phase takes time; it’s best to start as early as possible and begin preparation of documents immediately.
- You’ll first need to file a formal application, which you can do on your own or with the help of a lending expert.
- You’ll receive a “good faith estimate” from the lender, which is an estimation, to the best of their knowledge, of the total costs for securing the loan.
- Before the loan is fully approved, you’ll need to supply a variety of documents to the lender. These documents will vary, but may include:
- Pay stubs that show your income. To maximize your borrowing potential, this should include all jobs if you have multiple employers.
- Tax returns for the past two years to demonstrate your long-term earnings.
- Bank statements that show your total savings and expenses. This also helps support your income statements.
- Loan documents for any debts you currently hold. This may include car loans, credit card debts, student loans, and consumer debts.
- Financial disclosures for anything that impacts your income. This could include child support, alimony, legal judgements, and divorce decrees. Anything that you pay or receive should be included.
- Explanation on any credit inquiries. Statistically, a credit inquiry will increase a borrower’s risk of default. Therefore, a lender may request information as to why there are credit inquiries on your profile.
- Information on any large deposits that are outside your typical income. Gifts can be used for downpayments, but lenders usually want to document the source if it will be used to secure a loan.
- If the large cash deposit is a gift that will be used as a downpayment, the lender will likely request a gift letter, which simply outlines the nature of the gift and its purpose.
- Repeat or updated information on any of the above. Lenders need as much information as possible, and they may request documents that seem repetitive or unnecessary. This is simply part of the process for verifying your information.
4. If you are approved, the lender will issue a loan commitment letter. This states their willingness to support your loan, although they usually have conditions, such as a successful appraisal and a requirement that there be no changes to your financial situation.
5. An appraisal will be ordered by the lending official or mortgage broker. If the appraisal comes back with a strong value, the purchase process can move forward. However, if the appraisal is low, a change to the contract may be required. These changes could include a reduction in purchase price or a larger downpayment.
6. A copy of the loan commitment letter should be sent to the listing agent. The financing contingency can now be removed from the contract.
7. Homeowners insurance will be ordered and proof of this insurance should be sent to the lending office.
Remember, this process can be long and extensive, with many details that seem overly meticulous. However, if you prepare your documents and information early, you’ll have everything you need to complete Phase 2 of the Wisconsin buying guide.
Phase 3: The Final Closing in Wisconsin
In Wisconsin, the final closing takes place at one table with all parties together at the same time. (Unless this is not possible. Perhaps the seller has moved to a new area.) The buyer and seller will sign all documents and, once complete, the buyer can take possession of their new Wisconsin home!
- A final cash figure is calculated. This is the total that the buyer will need to bring in the form of a cashier’s check. This is based on the closing costs, property taxes, utilities, and other payments. In Wisconsin, the buyer pays to record the transaction. Search fees can be added in some Wisconsin counties, but this payment may be negotiable. Escrow fees are usually negotiable and could be included.
- Before the closing, the buyer usually conducts a final walkthrough to ensure the property is still in good shape and has not been damaged.
- At the closing, the buyer and seller will sign all documents.
- You will pay the remaining funds in your downpayment to the attorney or professional who is overseeing the purchase.
- Your purchase will be recorded with the appropriate municipality, which could be the city or county.
- You’ll receive your keys and can now move into your Wisconsin home!
Conforming Loan Limits in Wisconsin
Conforming loans, which are supported by the federal government in a variety of ways, have advantages that make them more attractive to homebuyers. They often have lower credit or downpayment requirements, and they sometimes have lower interest rates, although this is not guaranteed.
For many Wisconsin homebuyers, it’s beneficial to use a conforming loan, such as an FHA loan, VA loan, USDA loan, or a loan supported by Fannie Mae or Freddie Mac. However, these loans have limits; you can only borrow so much with a conforming loan.
The limits for Wisconsin, as of writing this article, are:
- Single family: $647,200
- Two units: $828,700
- Three units: $1,001,650
- Four units: $1,244,850
The entire state of Wisconsin is under the base-loan limits. From Grant County, which borders Iowa and Illinois, to Kenosha County which touches Lake Michigan and the Chicago metro area, the Wisconsin conforming loan limit for a single-family property is just over $647,000. This includes all counties up to gorgeous Door County, the peninsula jutting into Lake Michigan, as well as Douglas County, which touches the start of Lake Superior near Duluth, Minnesota.
Even in more high-priced counties, these limits remain. Counties like Dane (Madison) and Walworth (Lake Geneva), two areas known for expensive housing, are subject to these limits.
Note: These limits are subject to change and may not reflect the current limits for conforming loans. For updated and accurate limits in your county, contact a local lending professional.
Wisconsin Downpayment Assistance Programs
While buying a home brings numerous benefits, the downpayment can be difficult for many aspiring homeowners. To help you overcome this challenge, governments and nonprofit organizations in Wisconsin provide numerous downpayment assistance programs.
Here are a few options for buyers in the Badger State…
Wisconsin Statewide Programs
The Wisconsin Housing and Economic Development Authority (WHEDA) provides downpayment assistance through two different programs…
Capital Access
Buyers in Wisconsin can take advantage of the Capital Access program, which provides support that can go as high as 6% of the purchase price. This comes as a 10-year fixed-rate second mortgage, which has an interest rate that is the same as the primary loan.
Easy Close
This program gives homebuyers access to a downpayment loan that can be as high as $3,050 or 3% of the purchase, whichever is greater. The loan has a 30-year term with no monthly payments and a 0% interest rate.
Major Local Programs in Wisconsin
Western Dairyland Economic Opportunity Council
Buyers in Eau Claire, Trempealeau, Jackson, or Buffalo counties can utilize this program, which provides as much as $2,500 in financial assistance. These funds can be used for a downpayment as well as closing costs, mortgage insurance, or homeowners’ insurance.
Movin’ Out Down Payment Assistance Loan Program (Dane County)
If you live in Madison or the surrounding area and have a household member with a permanent disability, you may be eligible for financial assistance through Movin’ Out, a nonprofit organization. This program is specifically targeted for first-time buyers, single parents, and displaced homemakers purchasing in Dane County.
Milwaukee Home Down Payment Assistance Program
The city of Milwaukee helps residents purchase homes through a generous grant program, which requires no repayment. Grants can be as large as $5,000 for all Milwaukee properties, while homes in certain areas may qualify for grants as large as $7,500.
Common Requirements for Downpayment Assistance in Wisconsin
Each program will have its own specifics, but there are some common requirements that are typical across most DPA programs.
Most start with an income limit, as the programs are intended for low- and moderate-income buyers. For example, the Western Dairyland program has an income limit around $30,000 for a single-person household. The limit goes up as household size increases. (Western Dairyland has one of the lowest income limits; most are not this low.)
Programs generally have a limit on the purchase price, and you’ll likely need a decent credit score. Most, if they have a credit requirement, need at least a 620 or 640 score.
Many programs will also require that borrowers are first-time homebuyers. However, this restriction may not apply if you haven’t owned in the past three years. Numerous programs also waive this requirement for important public servants like police officers and firefighters.
Wisconsin is a wonderful place to own a home. If you need help with your purchase, contact our team and we’ll help you find the right Wisconsin downpayment assistance for your specific needs.
