Whether You Are A First Time Home Buyer, Veteran,
Investor or Want to Refinance, Here Are Some
Practical Steps to Home Financing –
First of all, despite what you may have heard, you don’t need a 20% down payment. Instead you will need to pay some type of mortgage insurance or funding fee.
There are still two programs that are 100% financing for home loans:
1. The VA loan for veterans and reservists.
2. The Rural Housing Program, for properties outside urban areas. In Mesa County that would be places such as Fruita, Palisade, Whitewater, DeBeque and Collbran, Colorado. FHA (Federal Housing Authority) loans require 3.50% down payment and Conventional Loans require 5% down payment.
Most home loans require a credit score of at least 620. However, the higher the credit score the better deal you will get on the interest rate. A 740 credit score or above is the best. So before going to a lender, get a copy of your free credit report at Annual Credit Report. Dispute anything that is incorrect with the 3 major credit repositories. If you don’t have a credit score, get a credit card from somewhere like Orchard Bank, which can be backed by your own money. Borrow a small amount and pay back every month on time until you establish good credit.
PROOF OF INCOME
You do need to prove your income, which is a requirement in the State of Colorado. If you are employed, then your most recent 30 day paystub plus last years W-2 will be needed. If you are self employed, the last 2 years of your federal income tax will be required.
CONTRACT ON A HOUSE
Before putting a contract on a house, you will need to be pre-qualified for a mortgage. I would recommend getting referrals from family and friends.
In order to get a license in the State of Colorado, all Mortgage Brokers must pass a background check, credit check and take a annual mortgage loan test before they can be licensed. Mortgage Brokers are also required to be bonded and take updated educational classes each year on home financing.
Mortgage Brokers usually have several lenders they can shop your loan to, and as a big advantage aren’t locked into the policies of one lender. You should look at 3 lenders at the very minimum. You need to get at least one Good Faith Estimate of closing costs from each of those lenders. Then at this point, you will need to decide if you should go for the lowest interest rate or the lowest closing costs or something in between.
Once you have a contract on the house, then you will need to make application for the loan. You will need to get all documentation your lender and underwriter asks for. You should then get an approval from the lender and a cleared to close. This process generally takes about 30 days.
Next step, enjoy your new home.
For over 30 years I have been doing home loans in Grand Junction for first time home buyers, investors, veterans, debt consolidation or people that want to refinance their current mortgage. As owner and manager of Dependable Mortgage Co., in Grand Junction, Colorado, I offer friendly, professional service and would consider it an honor to help you in any way that I can when it comes to financing your home.
I take my job serious as I know that when purchasing or refinancing a home, it is usually the biggest transaction that people will make. Sometimes the process can be complicated, which is the purpose of this blog to try and answer some of the questions you may have. If not, please don’t hesitate to contact me. Good answers to your questions can save you a lot of time, money and grief in the long run. If you have any questions, please don’t hesitate to call.
Rhonda Sherman, Owner
License # 100008357 NMLS # 381084
145 Grand Ave., Suite B
Grand Junction, CO 81501
Office: (970) 257-1502 or Cell: (970) 250-8613
Web site: Dependable Mortgage Co. (apply online 24/7)
Regulated by the Division of Real Estate
An Equal Housing Lender