If you're thinking about purchasing a Denver home, here are ten rock-solid tips for making the financing part of the transaction as easy and seamless as possible. Knowing financing basics will help to keep headaches and pressures to a minimum, allowing your purchase experience to be as fun and exciting as you expect it to be.
- Before looking at properties, get pre-qualified for a loan. Contact your lender, who will take your application, and, if you are qualified, will provide a pre-qualification letter. This letter will accompany your offer, and helps you provide a stronger offer by giving the seller confidence that you can get a loan, and that the property will not be tied up for weeks with an unqualified buyer. If you don’t have a lender, the Bandy Team can make a referral for you from one of our experienced lender partners.
- If your credit isn't good, talk with your lender. You may still qualify for a loan, depending on the length of time and the reason for your less-than-perfect credit. Your lender can determine whether your credit history might prevent you from qualifying for a home loan, or if steps can be taken to raise your credit score.
- Be prepared to make a down payment. The amount of down payment requirements varies, depending on the type of loan. Many down payment assistance programs are available, and one of these programs may loan or grant you the funds necessary for the down payment. Your lender knows about such programs in your area.
- Keep funds in reserve for closing costs. These are charges for services related to the closing of your real estate transaction. They include, but are not limited to:
- * Closing fees charged by the title company handling the transaction
* Title policy issuance fees charged by the title insurance company
* Mortgage insurance fees
* Fire and homeowners insurance
* County Recorder fees for recording your deed
* Loan origination fees
Your lender can provide a good faith estimate of closing costs, as well as information about loan programs that can assist in financing your closing costs.
- Some loans have "points;"some do not. A “point” is a loan fee, equivalent to one percent of the loan amount. Together with the interest rate, points make up the yield on your loan for the lender. Some lenders charge a higher interest rate, in return for charging no points. Shop around with various lenders, to make sure your loan has competitive costs.
- Know the difference between a fixed-rate mortgage and an adjustable rate mortgage. The decision lies in two factors: whether mortgage rates are at a high or a low point when you purchase, and the length of time you plan to live in the home. If rates are high, an adjustable rate might be attractive since subsequent rate drops could reduce your monthly payments. Also, lenders may offer a low rate during the first few years of an adjustable mortgage, to make it more attractive to you. If interest rates are low, you'll probably want to opt for a fixed rate, given the possibility of eventual increases in interest rates.
- There are the two main types of mortgage loans.
*Conventional Loans:Conventional mortgages are available with fixed or adjustable interest rates.
* Government Loans. These include Federal Housing Administration (FHA) fixed and adjustable rate mortgage loans, and Veterans Administration (VA) fixed rate mortgage loans. - If you have a low or moderate income,there are special programs designed to help you. These loans are available through private lenders, and through local and state housing agencies. Your mortgage lender will be aware of these types of loan programs.
- You might be required to pay mortgage insurance. Mortgage insurance protects the lender from potential losses. Conventional loans requiring larger down payments do not require mortgage insurance. Mortgage insurance is always required on FHA mortgage loans.
- Home loan counseling is available for prospective buyers. Classes are offered which walk potential buyers through the process of purchasing a home. Topics include home selection, realtor services, lenders, loan programs, home ownership responsibilities, the process of saving for a down payment, and other important information. Many first-time homebuyer programs require homebuyers to attend these classes.
If you have any questions, feel free to contact your local Denver area real estate professionals, the Bandy Team! Let the Bandy Team guide you through all phases of the home buying and home selling process in Denver whether you’re searching for a home in the Lowry area of Denver, real estate in Cherry Creek, or any of the other fine communities surrounding Denver. We are here to help you find your dream home and will guide you every step of the way!
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Until next time,
Marianne Bandy, Team Leader
The Bandy Team
Keller Williams Park Meadows
BandyTeam.com - Denver Real Estate & Homes
720-466-3790
