This post provides general information and resources as a starting point and should not be construed as professional financial advice.
Choosing the Right Mortgage: Key Considerations for Home Buyers
The number of lenders, mortgage products, fees, and government-backed programs available can be overwhelming. Add in the long-term financial and tax implications of your loan type and terms, and it’s easy to see why choosing a mortgage can feel complex. Doing your homework — and getting advice from trusted professionals — can make all the difference.
Get Professional Financial Advice
Whether you’re a first-time homebuyer or planning your next move, it’s highly recommended to consult with an objective fiduciary, such as a fee-only Certified Financial Planner (CFP). A qualified advisor can help ensure your home purchase and financing decisions align with your long-term financial goals and personal risk tolerance.
To find one:
- Search for fee-only Certified Financial Planners in Madison, WI
- Look for CFPs offering virtual services
Home Buyer Education Resources
Free homebuyer education courses can help you understand the financing process and how it fits within your budget. Here are a few options:
- Home Buyers Round Table – Workshops for first-time buyers, including down payment assistance information.
- Freddie Mac CreditSmart Homebuyer U – A self-paced online course covering housing and financial capability resources.
- UW Credit Union – Free webinars for first-time homebuyers.
Tip: Talk to multiple lenders — both local and national — to compare your financing options. Then review your choices with your financial advisor before committing.
Types of Mortgages
Interest Rate Structure
Fixed-Rate Mortgage:
Interest rate stays the same for the full term (commonly 15 or 30 years).
Adjustable-Rate Mortgage (ARM):
Rate is fixed for an initial period (often 5, 7, or 10 years), then adjusts based on market rates. May start lower than fixed-rate loans but carries future uncertainty.
Government-Backed Mortgages
Various federal, state, and local agencies insure or guarantee certain loans or offer down payment assistance. These agencies don’t lend directly but work through approved banks and credit unions.
Federal Programs
- FHA Loans: Help buyers with lower credit or limited savings for a down payment. Learn more on NAR’s website.
- VA Loans: Guaranteed by the U.S. Department of Veterans Affairs for eligible veterans. Learn more on the VA website.
Conventional Loans
Not insured or guaranteed by the government. These may be purchased by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac if they meet certain “conforming” criteria.
Wisconsin Agency – WHEDA
The Wisconsin Housing and Economic Development Authority (WHEDA) offers low-cost financing programs for qualifying home buyers.
- Partner lenders include: Capitol Bank and UW Credit Union.
Portfolio Lenders
Some local lenders keep loans in-house rather than selling to GSEs. This gives them more flexibility in underwriting. Many credit unions and community banks are portfolio lenders — it’s worth talking to at least one.
Understanding Loan Costs and Making Comparisons
The Consumer Financial Protection Bureau (CFPB) recommends getting quotes from at least three lenders. Helpful CFPB resources include:
Down Payments
According to the National Association of REALTORS® (NAR):
- The median down payment in 2024 was 18% overall, and 9% for first-time buyers (NAR source).
- Down payments under 20% typically require Private Mortgage Insurance (PMI) for conventional loans. (more about PMI from Fannie Mae)
- 70% of first-time buyers used personal savings, while 21% drew from investments or retirement accounts (NAR Source).
Discuss your down payment amount and source with your financial advisor to find the best fit for your situation.
Researching Mortgage Lenders
When comparing lenders, look for transparency in rates and fees.
Rate vs. APR
The interest rate reflects the base cost of borrowing. The APR (Annual Percentage Rate) includes fees and closing costs, showing the total loan cost. A lower rate isn’t always better if fees are high — review both carefully before deciding. Learn more at the CFPB website.
Lender Customer Service Matters
The right lender should be responsive, organized, and patient with your questions. Your lender and loan officer will handle key steps such as:
- Providing written loan cost estimates
- Issuing pre-approvals
- Requesting borrower documents
- Managing appraisals and underwriting
- Issuing loan commitments and preparing for closing
Examples of Local Lenders
- Summit Credit Union
- UW Credit Union
- Capitol Bank
- Associated Bank
- Thompson Kane
- Wintrust Mortage – Craig Schauer, Senior Mortgage Consultant
- Fairway Home Mortgage
National Online Lenders Include
Additional Resources
- Fannie Mae Mortgage Affordability Calculator
- Nerdwallet How to Choose a Mortgage Lender
- Freddie Mac: 6 Tips to Consider When Shopping for a Lender
- Rocket: How to Choose a Mortgage Lender
Have questions?
We’re happy to help — contact us to discuss your plans and next steps.