Landmark CU Expands First-Time Home Buyer Program with Construction Loans

NEW BERLIN, Wis. – Not everyone who buys a home wants a house someone’s lived in before. Some people prefer to build their own home and be the first occupants. Sometimes building a home from scratch is simply a better value than buying a pre-existing one. Members of Landmark CU now have a cost-affordable option. The $703-million credit union has expanded its first-time homebuyer program to include construction loans. Members who either have never owned their own home or who haven’t done so in the past three years are eligible to apply. Landmark introduced its first-time homebuyer program in June 1995. Since that time, the credit union has closed more than 1,000 loans for first-time homebuyers. The program waives all costs fees associated with purchasing a home, including the closing fee, document preparation fee, title fee, appraisal fee, processing fee, flood plain certificate, filing fees and credit report. The CU estimates these fees add up to $980. Additional charges facing a first-time buyer constructing a new home can add up to $1,680 for title, inspection, and conversion-to-fixed fees. “Many first-time homebuyers don’t realize they can afford to build their own home. With today’s rates, it can actually be more cost affordable to build a home rather than buy one,” said Landmark’s VP of Marketing Patricia Ransom. She explained that the idea of adding on construction loans to Landmarks’s first-time homebuyer program was made almost simultaneously to the CU’s decision to sponsor a television show called “Your First New Home” that airs on Fox-Channel 6 in the Milwaukee area. Guests on the show discuss first-time home buying, and the show also features guests from the construction industry who explain how viewers can afford to build their own home. “Once we decided to sponsor the program, we decided it made sense for us to offer construction loans,” said Ransom. Members who are approved for construction loans through Landmark’s first-time homebuyer program pay a one-year adjustable rate mortgage at 3.9%. All fees are waived, including those normally charged members applying for a mortgage. Once the home is completed, members can either convert to a fixed-rate mortgage or retain the one-year ARM. Ransom said Landmark, “considers this our investment in members who are first time homebuyers.” She said the credit union isn’t concerned about losing money because of its fee-waiver policy. Landmark estimates it recoups what it otherwise would have earned in fees when it sells the first mortgage on the secondary market. Landmark sells most of its first mortgages on the secondary market to either Freddie Mac or Fannie Mae, but it retains all the servicing. Ransom said the credit union currently has $136 million in its first mortgage portfolio and about $454 million in its servicing portfolio. About 27% of Landmark’s members have their mortgage with the credit union. “We estimate we’ll break even on the construction part of the loan, but make money on the sale of the first mortgage loan and then on the servicing,” she said. -