Buying a home in ColoradoProspective home buyers in Colorado will want to know as much as possible about the physical condition of the property they are purchasing. They will want to know about any problems that could affect the value or desirability of the home before signing the contract. In the past, sellers were under no obligation to tell the buyer about problems unless they were asked about it directly. But Colorado now obliges a seller to inform prospective buyers about certain conditions of the home. Failure to obey seller disclosure laws could make the seller liable for all costs relating to the nondisclosure. Other than the normal disclosures that must be made, Colorado state laws require home sellers to make the following disclosures:
- The property may be in a special taxing district
- Whether drugs were manufactured on the property
- The source of drinkable water (C.R.S.A. § 38-35.7-104)
- Proposed transportation projects (light rail project, bus terminals, airports …) that may now or later affect the value of the home
- Any oil and gas activity and or mineral rights associated with the property
Refinancing a home in ColoradoIt’s no harder to refinance your mortgage in Colorado than in most other places. In fact, there’s only one rule the state has that others may not. And it’s a low barrier that anyone can clear. The Code of Colorado Regulations (4 CCR 725-3) says you must provide on your application form a "purpose or reason" for why you are refinancing. Providing a purpose is easy. If you’re refinancing for a lower rate and monthly payment, or a shorter loan term, you can state that. If you’re getting a cash-out refinance, just say what you want and why. Perhaps, "I need a lump sum to consolidate my credit cards and other debts." Or, "to finance a wedding or vacation while also getting a better interest rate." There seems to be no duty to have a "good" reason.
How to start the home buying process in ColoradoColorado mortgage rates are historically low for both adjustable- and fixed-rate mortgages. Borrowing at low interest rates has inspired first-time home buyers to join the housing market. The low-rate environment also means more people are buying vacation homes or refinancing their existing mortgages to get better loan terms or tap home equity. However, not all borrowers know how to start the mortgage process. So if you’re thinking about buying a home in Colorado, keep reading.
1. Get a preapproval from mortgage lendersCurrent national average mortgage rates are historically low. But your actual rate will depend a lot on your unique profile as a borrower. Getting a mortgage loan preapproval is a great way to find out where you stand before you start shopping. Here are some good reasons to get preapproved:
- It shows your price range. When a lender runs the numbers before you start home shopping, you’ll have a good idea of how much home you can afford
- It tells sellers you’re serious about buying. With a preapproval letter in hand, property sellers and their real estate agents will know you’re a qualified buyer
- It helps you find the right loan product. Home loans come in many different varieties. The preapproval process can help you narrow down your options and identify the right loan program for you
- You’ll get a heads up on the down payment. Most, but not all, mortgage loans require a down payment. The preapproval process will determine which loan types you qualify for and how large of a down payment you’ll need
2. Start shopping within your price rangeWith a preapproval letter in hand, you’ll have a good grasp on your price range. It’s time to look for homes you can afford within the range of your preapproved loan amount. But remember, you don’t have to spend up to your loan limit. Some borrowers may qualify for loans with monthly payments they’d struggle to afford. Also keep in mind that closing costs will add 2% to 5% of your home value in upfront costs. And, unless you qualify for a VA loan or make a 20% down payment on a conventional loan, you’ll need to budget for mortgage insurance premiums. Colorado has some of the lowest property tax rates in the nation, but property taxes are still based on your home value. Homes with higher property values require higher property taxes. Some mortgage calculators, but not all include these "real" costs that come along with the interest rates you’ve been quoted.
3. Make a competitive offer, sign a contract, and prepare for closingThe Colorado Association of Realtors reports a dwindling inventory of single-family homes in many communities as home sales continue to rise. Less inventory means more competition for existing homes. You’ll need your own Realtor or real estate agent to help you make a timely and competitive offer that will get the homeowner’s attention. Don’t be surprised if the home you want gets snatched up by someone who can make a more attractive offer. It’s hard to compete with someone paying cash for the home, or a competing buyer who makes an enormous earnest money deposit, or simply outbids you. Just move on to the next home on your wish list. When a homeowner agrees to your offer, you’ll sign a contract, and your home buying process will kick into higher gear. You’ll need to lock in a rate with your chosen mortgage lender, schedule a home inspection, and start getting your financial documents together for the loan underwriting process. It’s also time to start thinking about moving, transitioning utilities, and scheduling your closing date which is when your home purchase will be finalized.
Best home loans in ColoradoMost home loans in Colorado, as in other states, fall into three main categories:
- Government-backed loans: Government mortgages, including FHA loans, VA loans, and USDA loans, are insured by government agencies. This backing lets lenders offer low rates and favorable terms, even to borrowers with low credit and small down payments
- Conventional loans: Conventional or “conforming loans” conform to guidelines set by Freddie Mac and Fannie Mae. Unlike subsidized loans, the government doesn’t insure lenders against all losses which means lower credit borrowers will be charged higher interest rates
- Subsidized loans: Subsidized mortgages are also available in Colorado. The CHFA offers down payment assistance of up to 3% of your mortgage with no repayment required if you use one of its loan programs. It also offers a second mortgage program of 4% of your mortgage which you don’t have to pay back until you refinance or sell the property. You may pay higher interest rates for CHFA loans compared to government or conventional loan types