3 Questions to Ask When Applying For a Colorado Home Loan & Mortgage
One of the biggest financial decisions Colorado home buyers make involves their mortgage. If someone doesn’t get the right loan, interest rate or loan term, it can cost them tens of thousands of dollars over the life of their loan. How can consumers know they are getting the best deal? How do they know who to trust? If a consumer can take some time to ask a few key questions, they will be better off in the long run financially.
Is This The Right Company and Source of Funds?
There are 3 sources of funds available to people looking to finance a home. These include:
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Banks and Credit Unions
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Mortgage Brokers
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Mortgage Companies
Here is a chart this shows the differences between the three.
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Which is the Best Option?
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Interest Rates
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Lender Fees
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Avail. Programs
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Underwriting
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Time to Close
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Hassle Factor
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Responsiveness
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Servicing
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Bank/Credit Union
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Competitive
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Moderate
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Limited, Unique
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In house, tight underwriting
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Longer than 30 days
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high
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Slow
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may sell or keep servicing
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Mortgage Broker
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Depends
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High
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Depends
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No control of process, lots of overlays
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Longer than 30 days
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high
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Slow
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will sell 100%
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Mortgage Company
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Competitive
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Low
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Wide Variety
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In house, few overlays
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30 days or less
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Moderate
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Depends on the
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may sell or keep servicing
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if sell direct to Fannie Mae, Freddie Mac, or
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Company/LO
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Ginnie Mae
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If a Colorado home buyer is looking for the best rates, lowest fees, a wide variety of loan programs, has a desire to close in 30 days, with minimal hassle, they will do well to consider a large mortgage company that just does mortgages. A larger company will have national buying power and be able to secure competitive rates. Another good question to ask is, is the processing, underwriting, closing local and in house? Local people know their market better than people outside the local market. Ask how long the company has been in business, companies that existed prior to 2008 have staying power.
Am I Comfortable With the Loan Officer?
Not all mortgage advisors are created equal. Questions to ask include: How many years of experience do you have originating mortgages? Of the last ten loans you closed, how many closed on time? How soon do you return phone calls and emails? What is your philosophy of doing business (i.e. client first)? Are their online reviews or testimonials from past clients you can look at? Will the loan program, payment, interest rate and fees change from the initial disclosure to closing?
What is the Best Loan Type, Term, Rate and Fees?
Qualifying for a mortgage in Colorado is a lot like a fingerprint, each one is unique, one size does not fit all. What is important to one consumer (lowest rate) may not be to another (least amount of closing costs) while another may want the lowest down payment option. The basic loan types include VA (for active duty military and veterans), USDA (for rural properties) both offer zero down payment. FHA and Conventional are 3.5 to 5% or more down payment. Finally there are jumbo loans, which are over the conventional loan limit of $417,000 except on the coasts where the loan limit is $625,500 on conventional loans depending upon the county.
Another thing to consider is the loan term. The basic rule of thumb is the shorter the term (10, 15, 20 year) the least amount of interest you pay and the higher the payment. The longer the term (25, 30 year) the more interest is paid and the lower the payment. One way to have the best of both worlds is to explore an ARM (Adjustable Rate Mortgage). ARM terms are 3, 5, 7 and 10 years amortized over 30 years. Here the rate is lower and fixed for a set period of time, and then it adjusts. This option is worth considering if someone is going to move, sell or refinance in a certain period of time and is willing to take on the risk of the rate adjusting after the fixed period is over.
A final consideration is interest rate and fees. If someone wants the lowest rate possible, they might consider paying “points” to get a lower rate. If a consumer wants to pay the lowest fees, they may consider taking a slightly higher interest rate and receive a credit from the lender to cover some or all of the closing costs associated with the loan. A true professional will be able to lay out each option so you can make the best choice for your home loan.
When qualifying for a mortgage, smart consumers take time to ask some key questions. A few minutes could save you thousands of dollars.
Apply Online Here and Get Your Home Loan Pre-Approved
What Size Loan Can I Qualify For?
The Colorado Home Loan Team will find the best rates, programs, and terms
you qualify for to help you finance the purchase of your new home
Give us a call for your free consultation at 877-251-9709
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