How do I choose the best mortgage lender for me?
The best Colorado Springs mortgage lenders can save you thousands of dollars over the life of your loan, which is why it’s so important to shop around until you find the right one. Here’s what you should look for in a good mortgage lender.
- One who explains the process and answers questions in a timely manner.
- The lender offers both the lowest interest rate and the lowest fees.
- If that’s important to you, look for a lender that handles their own loans rather than outsourcing them to a third-party provider.
- Find a lender who respects your time. For example, if you’re hoping to close a house in 30 days, make sure the lender can guarantee you’ll close on time.
How do I get approved for a home loan in Colorado Springs?
You will be asked for documentation and sometimes this may seem excessive. Rest assured that this is all part of the process. These steps can make getting approved for a home loan in Colorado Springs easier:
- Order a copy of your credit reports. Each year, you are entitled to a free copy from each of the “big three” credit reporting agencies: Equifax, TransUnion and Experian. You can order all three online via annualcreditreport.com. Once you receive them, go through them with a fine-toothed comb to find any errors. Even a small mistake (like a missed payment or a balance showing on a debt you’ve paid in full) can lower your score.
- If your credit score is low, take steps to improve it before applying for a mortgage. Your credit score is the only evidence a lender has of how you’ve managed your debt in the past, and the lower your score, the more interest the lender will charge. It pays to have the highest possible score before applying for a mortgage.
- Have all your ducks in a row. Or, in this case, all your documents in one place. So when a lender asks to see your most recent tax return or W-2s for the past two years, you’ll be prepared. As you gather your records, make a list of your outstanding debts. The lender will also ask you about your monthly payments.
- Compare the prices. This means checking with three or more mortgage lenders. If you’re worried about the impact of all these checks on your credit score, you have nothing to worry about. Yes, your credit score gets a little tarnished when a creditor does a thorough credit check, but as long as you complete all of your loan purchases within two weeks, all of those checks will show up as one thorough inquiry. This “ding” will quickly disappear with regular, on-time payments.
- Provide lenders with all documents they request in a timely manner. It’s easier for you – and the lender – if you have things ready to go when they ask.
- Once you’ve been approved, compare offers from lenders. Look at everything from the APR (this is the “true” cost of the loan), to the menu of fees charged by each lender to lend you the funds.
What credit rating do I need for a mortgage in Colorado Springs?
Depending on the type of loan, it is possible to be approved for a mortgage with a credit score as low as 580. The problem with being approved for a mortgage with the lowest possible score is that the mortgage rate that is offered to you is likely to be high. It means getting married to a mortgage with higher payments than you would like. If you can take the time to build your credit score, it’s worth considering.
How much is a down payment for a home in Colorado Springs?
How much you will pay for a down payment depends entirely on the type of loan. For example, you can get a VA loan with 0% down payment and an FHA loan with 3.5% down payment. One reason you might hear people say you need at least 20% down is because buyers who put 20% or more down on a mortgage can avoid paying a monthly mortgage insurance. Mortgage insurance is a fee you pay to the mortgage company. They, in turn, buy insurance on the loan, so if you default, the lender will recoup some of the loss.
What homeownership programs does Colorado Springs offer?
While some homeownership programs are statewide, others are offered specifically by El Paso County. Here is a sample of the types of programs available in 2022:
- Single Family Mortgage Bond Program
- Colorado Housing Assistance Corporation (CHAC) – down payment assistance
- Colorado Housing and Finance Authority (CHFA)
- United States Department of Agriculture Rural Housing
What else should I know about buying a home in Colorado Springs?
It’s no secret that we are in the midst of a competitive housing market. The best thing to do is arm yourself with information about pre-pandemic home values and try to estimate how much they might be worth once prices start to stabilize (your real estate agent can help).
Don’t get so caught up in a shopping spree that you’re willing to spend more than you’re comfortable spending, and don’t spend so much that you sacrifice your financial security. Before you do anything else, analyze the numbers to find out how much you can afford.
Finally, don’t feel bad if this market is a little too hot for you right now. Waiting means more time to collect a larger down payment and ultimately choose the lender that best suits your needs.