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Securing a First Time Home Buyer Loan in Colorado
If you’re a first time home buyer in Colorado, preparation for your mortgage is an essential part of the home purchase process. It’s not always easy to buy a home. If you’ve done the right research and explored your options, you won’t face as much stress or confusion.
Colorado First Time Home Buyer Information
You have options, and our goal is to make sure you know what they are. Our comprehensive first time home buyer checklist will walk you through the steps involved in funding your first home purchase. We’ll go over some of the most critical steps here.
Know what you can afford. This isn’t hard, but it will take some serious thought. What’s your income? What will your income realistically be in five years? Don’t borrow more money than you can handle, but make sure you aim for the amount you truly need to purchase a home that meets our needs.
Research different mortgage types. Do you understand the differences between a fixed rate mortgage and an adjustable rate mortgage? Do you know whether or not you need a jumbo loan? Every different mortgage type available has upsides and downsides. As a first time home buyer, you should check them all out and consider alternative programs, such as the FHA mortgage program, which we’ll discuss below.
Know your credit score. If you don’t know this, you may be setting yourself up for failure. A low credit score will prevent you from getting the loan you need. Find out what condition your credit is in before you apply.
Compare local mortgage rates. This is one of the most important steps in the process. The mortgage rate is the cost of your loan. Find out what rates lenders are offering. Contact at least three or four lenders and ask.
Obtain preapproval. Before you try to negotiate with a seller to purchase a home, make sure you’re preapproved for the loan you’ll need. Sellers won’t take you seriously otherwise, and if you find out that you can’t get a loan at all, you may lose out on the home you’ve worked to find.
These steps will help you secure the financing you need without the stress and confusion that often accompanies the home purchase process. Review our checklist, linked above, for further information.
1st Time Home Buyer Loan Programs
The most well known mortgage program for first time home buyers is the Colorado FHA loan. This loan is specialized to meet the needs of buyer who don’t have significant equity or cash reserves to back their home purchases. These loans are insured by the Federal Housing Administration (FHA).
FHA mortgages have grown in popularity due to their low credit score and income requirements. You also won’t have to make much of a down payment with an FHA loan. The down payment will amount to 3.5% of the home purchase price, which is far lower than the 20% required by conventional loans.
Colorado is a popular destination state that is home to the famous Rocky Mountains and many ski resorts. The natural beauty of the area is known throughout the nation, and many cities, such as Denver and Boulder are popular for their access to natural parks and wilderness areas.
In Colorado the homeownership rate is 67.3% and the median home price is $166,600. This is good news for first time home buyers.