FICO® scores & home loan approval – what should you expect?

By: Carrie Niess

Lenders use your FICO® (Fair Isaac Corporation) score to determine your credit risk, or ability to repay a loan. The more you understand how much it can affect how lenders see you and what loan terms they offer you, the better prepared you’ll be when it comes time to apply for a mortgage.

How to know whether you have a good FICO® score

The FICO® score takes into consideration payment history, current levels of debt, length of credit history, new credit, and types of credit used. It typically ranges from 300 to 850. A good score is usually in the range of 670. While many lenders use FICO® scores to help them make lending decisions, each lender has its own strategy. This includes the level of risk it finds acceptable for a given credit product.The better your score, the easier it is to be approved for a home loan, not to mention you’ll receive more competitive interest rates.
FICO® score affects your mortgage interest rate: here's how

The following are some tips that will help you understand the importance of, and function of, your FICO® credit score:

  • Even one late payment can reduce your credit score by more than 50 points. On-time payments are the most important factor in calculating your FICO® score. Be consistent and diligent about making payments on time.
  • A creditor can report a late payment at any time, even if the payment is one day late.
  • Yet, a shorter late payment (e.g. 30 days) is not as severe as a later payment (e.g. 90 days).
  • Numerous late payments are calculated into your final FICO® credit score. One missed payment may be an oversight, while five may be detrimental to your financial portfolio.

 

Start on the right path to successful financial management. Follow these 5 tips to ensure you have a healthy FICO® score:

Check your credit report

Once a year, request your credit report from the top three bureaus: Experian, Equifax, and TransUnion. To check your score for free, use Mint for your personal finances — the score is updated regularly. Or use a distinct provider such as Credit Karma. Receive your free copy of all 3 reports once annually from annualcreditreport.com.

Dispute any errors

Ask to have inquires removed that you did not request. As important, most credit card companies will work with you if there was one instance where you forgot to pay on time. Call the lender directly and ask for removal. Just be sure all future payments are on time.

Pay down the balance

This is especially true when it comes to high interest cards. Ensure you pay on time monthly and make efforts to pay more than the minimal required payment. Paying your cards off in full — on a monthly basis — is ideal.

Also: be sure you are not maxing out card balances. It’s much healthier to actively use a couple of cards versus just one. And — believe it or not — you shouldn’t close any extra cards that have zero balance. This will help you maintain a higher utilization limit.

Set up payment reminders

Setting up payment reminders only takes a few minutes, but can have a significant impact on your ability to make payments on time. This is a great step to take because making your payments on time is one of the most important factors in determining your FICO® score. You don’t want forgetfulness to sabotage your FICO® score when you have the funds to make your payment on time.

Improve your debt utilization ratio

Debt utilization measures how much money you owe creditors compared to how much credit is available to you. For example, if you have a $2,000 balance on your credit cards but have a $10,000 credit limit, your debt utilization ratio would be 20%. To improve this ratio: pay off debts, especially those close to maxing out. To improve your FICO® score: keep your debt utilization ratio under 30%.

Once you feel you have healthy credit, start shopping around for home loans. Of course you can shop any time, but good credit history makes it much easier to qualify.

 

Some of the most popular loan programs include:

FHA

If you’re looking for a low down payment option that requires minimal lines of credit or one that is open-minded to bad credit, consider an FHA loan. Assuming you have a 580 or higher FICO®score, you may only have to put down 3.5% of the home’s purchase price. Depending on which lender you’re working with, that doesn’t mean you’re excluded from this loan option should your credit score be lower than 580. You just have to come up with a larger down payment, looking closer to 10% of the home’s purchase price. Either way, you’ll only need two lines of credit to qualify.

Conventional

Another option is a conventional loan. Credit score requirements for conventional loans vary by lender, but tend to require a minimum of 620. With this loan program, it’s expected you have good credit history and overall good to excellent credit. In return, you can expect to receive some of the most competitive interest rates and loan terms.

VA

Through a VA loan, there is no minimum credit requirement. Each lender sets its own guidelines. At American Financing, we look for scores that are at least 600 for new home purchases or 620 for refinances, both of which fall closely in line with what other lenders require. We, of course, review the entire loan profile before making a lending decision and do not base our decision strictly on credit score. No matter what your score, it’s always worth a call to see exactly what you can qualify for. After all, this loan program offers some of the most attractive overall benefits to our armed forces and veterans.

 

You have the facts. So, it’s a great time to make your next move — whether it’s continuing to build your credit or starting the mortgage process. Remember, the salary-based mortgage consultants at American Financing are here to guide you through options when you’re ready.

 

Carrie Niess is a copywriter for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.

Buying and Selling a Home Quickly: How to Avoid Two Mortgages

By: Tim Beyers

Timing is everything when it comes to buying and selling a home at the same time. Get it perfect, and you’ll be moving in to your new home just as your buyers are ready to move into your old place.

Except this almost never happens.

Maybe you can’t find a buyer. Maybe you’ve found a buyer who’s having credit trouble. Or maybe your home inspections reveal some flaws that threaten to kill an existing deal. Whatever the reason, it’s not unusual for home buyers to be on the hook for a new home while also paying an existing mortgage. Any of these four strategies — listed in order of preference — can help to ease the burden when buying and selling a home.

 

Draft a rent-back agreement

You may be able to earn money to cover your soon-to-be mortgage payment by offering the existing occupants extra time to stay while you sell your property. “Rent-back” agreements generally run 30 days and are paid in a lump sum. They work well for sellers who either want or need to take their time moving.

For Drew Coggin, a quality assurance analyst at American Financing, a rent-back agreement was the ideal solution. It allowed the couple selling the home he and his wife were buying to arrange for 30 days’ extra time while waiting to complete their new home’s deal. “Turns out they were out in 27 days,” Coggin says.

 

Write a contingency into your contract

While “rent-back” agreements require a measure of good faith between the buyer and seller, a contingency can be written straight into the purchase contract. Banks tend to like them because they ensure buyers aren’t taking on an extra mortgage they can’t handle.

Coggin insisted on a contingency after making an offer on “the house my wife loved.” He was given 45 days to complete the sale of their existing home. They made the deadline and to this day he’s still a fan of contingencies, presuming you can get one. Don’t expect a seller getting multiple offers above asking price to accept a contingency, and don’t be afraid to ask for one if the house you’re looking at has been on the market for a few months.

buy home, sell home

 

Take out a Home Equity Line of Credit (HELOC)

Planning to sell a home with a value higher than your mortgage balance? A Home Equity Line of Credit, or HELOC, can give you cash access to a portion of your home equity.

Say you’re buying a $350,000 home and want to put down $70,000 to cover the 20% minimum down payment to avoid paying Private Mortgage Insurance. A $100,000 HELOC would give you access to that cash and potentially a little more to handle monthly payments on your new home while you wait to sell. Just be warned: a HELOC is like a home-secured credit card. Hit the limit and you’ll be tapped out, no matter how much home equity you have.

Also, you may be unable to open a HELOC while your home is on the market. These loans are generally for existing homeowners looking to make improvements or consolidate higher interest debt.

 

Get a bridge loan

Like a HELOC, in that it’s based on available home equity but made to give buyers the capital to carry two mortgages, bridge loans are for those who have good reason to believe they’ll have no trouble selling their existing property at a premium. Buying a new home isn’t a big risk for them. They’re generally shopping in a hot enough market. Meaning, acting fast with a good offer is key to getting into the right house.

Trouble is, you’ll pay a price for that level of flexibility. Bridge loans aren’t widely offered and tend to include hefty fees and higher interest rates. You could be stuck paying more than you can afford if you’ve overestimated your ability to sell in a timely manner. Unless you’re actively investing in residential real estate — and using bridge loans to build a portfolio — you’ll likely do better with a HELOC or a simple contingency deal.

 

Choose wisely

Which approach is right for you when buying and selling a home? How about none? Selling first, banking the proceeds, and taking the time to hunt for the right home is always going to be the best choice.

If you can’t, contingencies offer the fairest deal and usually cost nothing. Renting is a tad more expensive. Though, it offers similar flexibility and doesn’t demand the paperwork and good credit of a HELOC. The expense of a bridge loan is likely to put it out of reach for most responsible home buyers. Avoid them if you can.

 

Tim Beyers is a mortgage analyst for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.

Refinance Tips: 6 Things to Do Before Signing On the Bottom Line

By: Tim Beyers

Whether it’s using home equity to pay off debt, to secure a lower interest rate, or to make home improvements, millions of Americans refinance their home every year.

Maybe you’re among this crowd. Maybe you have student debt to pay off or need a home loan to help a new student get started. How do you get the best deal when refinancing? What questions should you be asking, and what documentation should you be prepared to bring to your mortgage lender? We answer these questions and more in the six refinance tips listed below. First, let’s review what it means to refinance your home …

The basics of refinancing

For most of us, buying a home is a smart investment. Prices tend to go higher over time, creating “equity” we can use for other purposes. Put simply, equity is the difference between the value of your home and the amount still owed on your mortgage.

Say your home is worth $300,000 and you still owe $250,000 on your mortgage. The difference, $50,000, is the equity in your home. Refinancing is how we get at the equity, presuming you aren’t refinancing simply to lower your rate. (Called a “streamline loan” in industry parlance.)

There are as many options for refinancing a home as there are for purchasing a home:

  • If your aim is to lower your monthly payment … you can reset the clock on your loan and opt for a lower rate. For example: your 30-year mortgage has 22 years left on it before maturity but refinancing would get you a noticeably lower rate. Refinancing to another 30-year loan adds eight years back onto your loan but your interest payments decline thanks to the lower rate.
  • If your aim is to own your home sooner … you can refinance to a shorter term. For example: you decide to transform your 30-year mortgage into a 15-year mortgage to get a lower rate. Fewer years with a mortgage will save you tens of thousands in interest payments.
  • If your aim is to get cash for paying debt and remodeling … you can ask for what’s called a “cash-out” refinance whereby the terms include distributing funds to you at the end of the approval process. Make sure you know exactly how much equity you have before trying to cash out and wasting your time and that of your mortgage lender.

Bathroom remodel, double sink

Six refinance tips that could save you thousands

Whatever your financial needs are at your current stage of life, there’s likely to be an affordable option for refinancing. These six refinance tips can help you to navigate the process:

1. Check your credit score. Also known as your FICO score, this number can range from as low as 300 to as high as 850. To check your score for free, use Mint for your personal finances—the score is updated regularly—or a distinct provider such as Credit Karma. Be sure to look at the factors impacting your score. Are there things you could do to improve? If so, make those changes immediately and document what you’ve done.

2. Pull a credit report and correct any errors. Credit ratings agencies such as TransUnion, Equifax, and Experian compile events and account history in lengthy reports that includes your FICO score. Thankfully, the Fair Credit Reporting Act guarantees consumers access to these reports, free, at least once annually by visiting this site. Look for negative items listed. Are you being unfairly targeted for a late payment that was forgiven or a credit card that isn’t yours? So long as you can provide paperwork that provides proof of your claim, it’s possible to fix these and other errors and improve your credit score.

3. Look at your whole financial picture. What can you really afford? Do you know? Our mortgage loan calculator can tell you a lot. Or if your situation is more complicated, consult with a tax accountant or a fee-only financial advisor before deciding how best to use home equity when refinancing.

4. Check the value of your existing home if you have one. Years of increases the average value of home prices has been a boon for current homeowners. If you’re among this privileged list, it may be worth checking your home value. Do more than check proprietary sites. While they can give you a sense of what your home might be worth in ideal conditions, you also want to know how the market is performing. For that, try the “sold homes” search engine at Realtor.com. Put in your zip and then use the filters to find homes that are close matches for your own that have sold recently.

5. Shop around for rates. Mortgage interest rates can vary widely. Shop around online to get a sense of the range of available deals. Then, take those figures to a trusted agent to see what’s realistic and what isn’t given your financial situation. Just searching for “mortgage rates” on Google will bring you to a number of the most popular aggregators of current rate information.

6. Get help from an expert. Once you’ve checked your credit, assessed your financial situation, and learned more about current rates and the potential value of your home, it’s time to call up an expert and run the numbers. A good mortgage partner should not only be able to tell you what you can afford, but also the kind of deal you should seek and what it will cost you all-in—no surprises. Avoid commission-only loan officers who get paid to rush you into an expensive deal.

Today’s mortgage interest rates are a bargain by historical standards. But they may not stay that way for long. Check back with these six refinance tips if you’re thinking of making a move, and then involve an expert who can help you get the best deal.

 

Tim Beyers is a mortgage analyst for American Financing, a national mortgage bank employing salary-based mortgage consultants dedicated to helping homeowners make smart decisions that align with their unique financial goals.

Increasing Your Home’s Value: 5 Things you Need to Know

By: Carrie Niess

Increasing your home’s value can be beneficial for a variety of reasons. Outside of the obvious advantages of selling, increasing your home’s value may also allow you to complete a cash-out refinance to take advantage of extra equity in your home while enjoying lower mortgage rates and raising the funds to renovate.

What’s the best way to use that money to increase your home’s value? Here are a few ideas for where to look for a return on investment (ROI).

Home investments

Sometimes it pays to pay up. According to Zillow, a full-gut kitchen renovation averages a 75 percent return rate (i.e., average cost: $30,000; resale value/ROI: $22,500). However, if you are on a budget, you may be able to get more value by carefully choosing which parts and appliances to renovate and which can be left as-is.

Kitchen renovation - with new countertops - to increase home value.

If you don’t have a lot of money to invest, priority should go to projects with the highest ROI. For example, if your kitchen appliances are worn out, it’s a wise decision to replace them. And while you’re at it, think about the design surrounding them. You don’t have to completely replace countertops – unless they’re showing their age – but you can consider updating or adding a backsplash. Backsplashes are one of the most affordable ways to add life to your kitchen.

Moving to your bathroom, a simple home improvement may be your vanity. Outdated appearance? Update the faucets or even replace it all with a prefabricated vanity. There are many sizes and styles available, so you have options when trying to best complement your bathroom décor.

Improve curb appeal

First impressions are important. A great way to improve the look of your home is to work on landscaping. It’s relatively inexpensive and may be as simple as fresh mulch or new shrubs. Find easy shrubs, specific to Colorado planting, on the Colorado State University website.

Or, take your yard one step further by adding a flagstone walkway that’s accentuated with lighting. This offers an easy way to create beauty and functionality in one small project.

And for a bonus tip, courtesy of HGTV – take a photo of your home (walkway and driveway included), and convert it to black and white. Remove the color and the truth comes out. That is where you see the cracks in the walls and other glaring flaws. As time and money permit, you’ll want to address these issues to ensure you’re presenting a welcoming home that’s structurally fit.

Create energy savings

Energy efficient upgrades offer reduced utility bills and less maintenance, all while helping the environment. A few examples, as shared by the Department of energy, include:

  • Insulating your water tank could reduce standby heat losses by 25%–45% and save you about 7%–16% in water heating costs—and should pay for itself in about a year.
  • Replace your home’s five most frequently used light fixtures or bulbs with models that have earned the ENERGY STAR, and you can save 9% annually on your electric bill.
  • Install storm windows and save 12%-33% annually on your electric bill. Storm windows are cost-effective, easy to install, and cost a fraction of replacement windows.

Complete minor repairs

Get rid of the squeaks, scratches, dents, and dings. You may need to touch up moldings or door frames, add a little WD-40 to hinges (if not replace them altogether), or even refinish hardwood floors.  Every little bit counts when making a great impression on guests or potential buyers. Be sure you also test toilets, windows, drawers, and even smoke detectors to ensure they work properly.

Add fresh paint

Interior paint can be an inexpensive way to attract buyers. But how can you determine the best color for such an extensive audience? Research of course. Zillow’s 2017 Paint Color Analysis shows that walls painted in cool, natural tones — like pale gray or oatmeal — fall in top-performing listings. They perform far better than plain old white walls. And the colors you should stay away from? Depending on which room we’re talking about, you may want to reconsider yellows, reds, and pinks.

Dig deeper into the study and perform your own research before committing to any color changes. It could make or cost you hundreds, even thousands of dollars when it’s time to sell.

When it comes to home improvements, small things matter as much as the big things. Invest in your home, improve curb appeal, make repairs, boost your energy efficiency, and add a fresh coat of paint. You may not reclaim every dollar you’ve put in, but you’ll increase the likelihood of netting a better appraisal, higher home equity, and the sweet sell offer you’ve been angling for.

 

Carrie Niess is a copywriter for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.

Buying Your First Home In Colorado? 3 Things You Must Know

By Tim Beyers

Every year, bright-eyed new residents flock to Colorado. Many do so to buy a first home.

Over the twelve months ended on July 1, 2016, the Rocky Mountain state added 91,726 new residents. That makes it the seventh fastest-growing state in the union over that period, increasing its population by 1.68%, according to data compiled by the U.S. Census.Utah led the list (up  2.03%), followed by Nevada (up 1.95%), Idaho (1.83%), Florida (1.82%), Washington (1.78%), and Oregon (1.71%).

Here in Denver the increase follows a familiar pattern. According to coloradohomerealty.com, over 50,000 homes changed hands in the metro Denver area between 2014 and 2016. Prices increased between 9% and 11% annually during that period. If you’re buying a first home in Colorado and settling in the Denver metro area, start saving now. You won’t have to pay California or New York prices, but a small premium for the right home is typical.

What to do? Check our three tips for buying a first home in Colorado. We’ve also included key data on neighborhoods, school districts, and advice for enjoying the state’s many options for outdoor adventure.

Tip 1: Know Your Financial Options

Choices for buying a first home in Colorado are nearly as varied as the type of home you can buy. If you have good credit and can put down at least 20% of the purchase price, your best bet is a conventional loan since you won’t pay private mortgage insurance. And if you can’t muster a fat deposit? Try an FHA loan, which requires just 3.5% down. It’s even backed by the federal government. Your monthly payment will include mortgage insurance but the lower deposit and opportunity to start earning equity can make the trade-off worth it. Finally, if you’re either active duty military or a veteran, you may benefit most from a no-down-payment, low-fee VA loan. (Disabled vets enjoy even more savings.) Make sure your mortgage broker, banker, or loan officer explores every option available to you before you sign papers—rushing the process can cost you.

Tip 2: Study the Climate

We’re not talking about the weather. Here, climate refers to the real estate market where you’re planning to live. Do prices routinely rise or are they prone to significant volatility? Are existing homes selling below or above asking price? The more you know, the more likely you buy well enough to capture some equity in your first few years of home ownership. (Zillow’s local market reports are a good place to start your research.)

 Tip 3: Consider Your Career

Do you work in the tech industry? Boulder is attracting more startups every day while Castle Rock, Parker, and Highlands Ranch are well within proximity of the Denver Tech Center, which hosts a number of large tech companies. Downtown Denver plays host to finance and oil and gas companies. Lastly, Colorado Springs, and Littleton are aerospace hubs. Just don’t bid on a home that’s so far away from work that you’ll never get to enjoy your investment.  

How to get around Denver using public transportation.

More Ways to Make the Most of Your Move to Colorado

Once you know where you want to live, what type of home you can afford, and what home loan suits you best, it’s time to dig just a little deeper. Here are some extra considerations related to interests and stage of life:

  • Top neighborhoods if you’re planning to buy and stay. If you’re moving to Colorado with a young family or with plans to start a family, you’re likely to be looking at some of the state’s top school districts. Aurora, home to American Financing HQ, is regularly rated near the top with A+ schools such as Aurora Quest K-8. Over in Northglenn, a northern suburb of Denver, Hulstrom Options K-8 also gets high marks. Or if you’d rather live closer to the ski areas and have money to spend, Boulder’s Bear Creek Elementary is another A+ option, according to ColoradoSchoolGrades.com.
  • Top neighborhoods if you’re passing through. If you’re moving to Colorado to find a starter home, capture some equity, and move up, try Greeley or Westminster. According to a 2016 list compiled by The Denver Business Journal, both rank well for housing affordability yet remain near large cities (Westminster is just north of Denver) or major scenery (Greeley sits between Rocky Mountain National Park and the Pawnee National Grassland).
  • Popular neighborhoods for young professionals. LoDo (Lower Downtown), RiNo (River North Art District), Wash Park (Washington Park), and the Golden Triangle (Civic Center area). There are broad urban living options based on your style and interests, and these only name a few. Find a hip vibe, sporting events, and concerts downtown, LoDo specifically. Or if you prefer arts and culture, consider RiNo or the Golden Triangle. Last but not least, the outdoorsy group is going to want to be near the parks and water that Wash Park has to offer. Home prices vary, but there’s so much to do and many places to work within walking distance or a short ride. Denver also has convenient public transportation: the light rail, city buses, car sharing like Car2Go, and rideshares like Way to Go. Don’t think Uber and Lyft are your only options if you need to get somewhere.
  • How to enjoy the mountains — even if you don’t ski. In the Rockies, summer is off-peak for many resorts. Take advantage of this by booking getaways in high country spots such as Vail and Breckenridge. (Summer rates are usually cheaper.) Or drive to Evergreen, bring camping gear, and spend a few days in Rocky Mountain National Park. Driving in will cost you $20 for a seven-day pass, but you’ll want to check the reservations page if you need a guaranteed spot to set up camp. Buying in Evergreen is also an option, but you may have to pay a premium to get there. Commuting distance to Denver combined with the proximity of Rocky Mountain National Park makes it a compelling place to buy a home.
  • Help for those who haven’t bought. As a first-time home buyer, you may lack the funds to make a bid on the home you really want. Should you wait to buy? Maybe. Before you decide, see if you qualify for down payment assistance. The Colorado Housing and Finance Authority (CHFA) may be able to help get you into a home with just $1,000 down.

Bonus Tip: Buy for the Long Haul

A home is an investment. It’s like no other major purchase you’ll make in your lifetime. While buying in Colorado has been a good bet historically, there’s no guarantee you’ll be happy with your home or that it’ll provide the equity to move up. Buy right by knowing your financial options. Study what you’ll need to keep your home clean and presentable in the climate in which you settle. Finally, consider your commute and proximity to companies that could offer new opportunities.

That way, whether you’re passing through or settling in for a lifetime, you’ll be more likely to enjoy (and profit from) your time in the Rockies.

Tim Beyers is a mortgage analyst for American Financing, a national mortgage bank employing salary-based mortgage consultants dedicated to helping homeowners make smart decisions that align with their unique financial goals.

Interest Rate Influences: Here’s What Home Buyers Need to Know

By Tim Beyers and Carrie Niess

Buying a home can be a stomach-churning process if you’re watching and waiting for interest rate changes. Odds are you’re fretting over nothing.

While mortgage interest rates rise and fall for a variety of reasons (more on that below), they generally don’t move much. And even then it’s not likely to matter much in the long-run: a quarter-point change isn’t likely to alter the monthly payment on your mortgage by more than $20-$30, at the most.

“The right time to buy a home or condo is when you’ve found a good property in a good neighborhood where prices are on the rise. If you’re planning to be there for at least five years, make the move and don’t look back,” says Jonathan Payne, American Financing’s Director of Operations.

You also have more control than you might think. A top lender will give you options on the rate, the deadline, and the closing costs. Make sure you can realistically afford the deal before moving forward. Once you lock, the rate you choose is good for up to 60 days.

6 Things That Influence Mortgage Interest Rates

When should you lock? There’s no hard science to the process, but there are guidelines you can follow. Here’s a closer look at what can influence changes in any given week:

 

External influences on a consumer mortgage interest rate

 

Generally, bad news and uncertainty is good for mortgage interest rates. Investors tend to flock to bonds in bad times, and more demand pushes interest rates lower.

Something to keep top of mind: the Federal Reserve (Fed) influences the rate of bonds to which mortgage interest rates are tied. So, the market anticipates what the Fed will do and prices rates accordingly. While interest rates remain at historic lows, Payne says current pricing assumes rates will rise a few more times in 2017. If you’re in the market for a property, plan to lock as soon as is reasonable.

And in the meantime, do what you can to control your financial situation. Maintain healthy credit and, when you’re ready, consider a loan program that’s not too risky. A good way to accomplish that is by calling the salary-based mortgage consultants at American Financing. With access to every loan in the industry, you can trust you’ll find the best option and interest rate.

RELATED READING:

Tim Beyers is a mortgage analyst and Carrie Niess is a copywriter for American Financing, a national mortgage bank employing salary-based mortgage consultants dedicated to helping homeowners make smart decisions that align with their unique financial goals.

First-time Home Buyers or Coloradans with Limited Savings – We’ve Got a Home Loan for You

By: Carrie Niess

Colorado Housing and Financing Authority (CHFA) is Colorado’s trusted partner for affordable and responsible home ownership. Through participating lenders like American Financing, Coloradans have access to CHFA home purchase and refinance loans. These loans have competitive fixed rate financing and may offer down payment or closing cost assistance.

While first-time home buyers tend to be CHFA’s most frequent customers, with 56% of its 2016 borrowers being Millennials, the agency also serves Gen X and multi-generational families looking for their next home.

First-time homebuyers jumping in front of house.As with any home loan, borrowers can choose where they want to buy. There are no limitations to specific housing inventory. The agency says its average loan is for $225,000 while noting that many borrowers have been approved for new or near-new $300,000 homes. CHFA-backed originations can be found throughout the metro area with Aurora, Denver, Colorado Springs, Thornton, Commerce City and Greeley producing the most volume. Like a lot of the Denver area, these cities have significant new home construction.

First-time home buyers Scott and Heather MacPherson purchased their home for their young, growing family with the help of a CHFA loan. “Rent is so expensive, and we’d rather invest in something that is our own so we can build equity,” Heather said.

So is CHFA assistance for you? Below we’ve broken down the benefits, qualifications, and requirements into three categories. Read on to see if there’s a fit:

Limited savings, low income, or fair credit scores?

You may still be able to become a homeowner.

  • CHFA’s program is often promoted to first-time home buyers, but is available to anyone provided they fall within specific income and purchase price limits (PDF). These limits vary by county and household size.
  • Acceptable credit scores vary based on which CHFA loan program you choose. Typically, the program requires a mid-credit score minimum of 620.
  • Down payment assistance is available. This can help Coloradans get into a home for as little as $1,000 down.
  • Closing cost assistance is available. Lenders can receive a credit in the amount of 1% of the borrower’s first mortgage loan payment. This allows borrowers to use the credit to cover closing costs.

Want choices on who to finance with?

You have options. Combined, participating CHFA lenders have helped 88,695 Coloradans purchase a home.

  • CHFA is the loan servicer. That means they take over the loan after you complete the mortgage process with a participating CHFA lender.
  • American Financing has two of the top 10 producing CHFA loan closers in the Denver Metro area, and four total in the top 20 producers, going by data from the fourth quarter of last year.

Worried about closing, taxes, or even the unknowns post-purchase?

As a CHFA borrower, you will take a home buyer education class to prepare for the responsibilities of home ownership.

  • Attend home buyer education classes in-person or online.
  • If taken online, there is a $99 fee, and $50 for each additional co-borrower.
  • Classes are required and must be completed before closing on a home purchase.
  • CHFA curriculum includes (PDF): discussions about successful money management, key players in the home buying process, the inspection and appraisal process, and types of mortgages, among other topics.

“The home buyer class was very helpful. CHFA really tries to help people make informed decisions and further understand the home buying process,” the MacPhersons said. 

Now that you have a better idea of CHFA benefits, let’s not forget, it’s important to work with an experienced and knowledgeable CHFA participating lender.

First-time home buyer Kenny Earl credits his positive CHFA loan experience to American Financing. “My mortgage consultant walked me through loan options and explained each step of the process in detail.” Kenny added, “I didn’t know what to expect when buying a home. My first call discussed what I’d have to put down, what monthly payments would look like. The rep I worked with answered all my questions right up front. It made the rest of the process easy and painless.”

Access general information about CHFA home buying options by visiting the CHFA website. Or, visit the American Financing website to see all home loan options.

 

Carrie Niess is a copywriter for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.

 

RELATED ARTICLES:

8 Home Loan Benefits for Veterans and Wounded Warriors

By: Carrie Niess

More veterans and wounded warriors took advantage of government-backed mortgages in 2016 than any other year. In 72 years, it has helped more than 22 million active, reserve, and retired service members buy a home.

Yet remarkably, there’s still room to grow. Over 1 million wounded warriors aren’t taking full advantage of their VA loan options, research shows. (See related study: “Wounded Warriors Left Behind? Majority of Post-9/11 Vets Leave Millions of Dollars In Benefits Unclaimed“.)

If you’re on active duty or a vet, now’s the time to take another look at this incredible benefit!

Here are five benefits available exclusively to you and your peers:

1. No down payment or mortgage insurance required. Most loans require a down payment of 3.5% to 20% percent of the purchase price. If you utilize a non-VA loan, and put down less than 20 percent, you’ll be subject to mortgage insurance. That could increase your payment by hundreds monthly.

2. Government guaranteed. The VA proactively monitors each active loan to make sure payments are on track. The VA has foreclosure specialists who can help borrowers 60 or more days behind on their mortgage create a more affordable repayment plan.

3. Fast access, even if you’re on active duty. Service members become eligible for VA loans after having served 181 days during peacetime or 90 consecutive days during wartime — unless discharged or separated from a previous qualifying period of active duty service. You may also be eligible if you have more than six years of service in the National Guard or Reserves.

4. Buy or refinance repeatedly. You can work with the VA to use the benefit as many times as you’d like. There is a VA funding fee of 2.15% for first time VA loan use. That fee becomes 3.3% for each subsequent use of a VA loan. However, that rate is just 0.5% if you currently have a VA loan and only want to reduce your rate or possibly your term (additional restrictions apply) without taking cash out. This option is called a VA IRRRL (Interest Rate Reduction Refinance Loan).

5. Refinance up to 100% of home’s value. Lower monthly payments, consolidate debt and access cash, drawing on up to 100% of your home’s value. VA streamline and cash out refinance loans are far more attractive options than refinancing with a non-VA loan. That’s because many non-VA loans require some equity in the house. In fact, the cash out refinance option allows you to take an existing conventional loan and refinance it to a VA loan. It doesn’t have to be a VA loan refinanced to a VA loan.

Three added benefits available to wounded warriors, including:

1. Exemption from the funding fee. Vets rated at least 10% disabled (because of a service-connected disability) may be exempt from the VA funding fee. Costs add up quickly. Remember, the fee is generally 2.15% of the amount borrowed for first time use. That fee goes up to 3.3% for every subsequent loan. A disabled vet borrowing $200,000 would save $4,250 on their first home purchase or $6,600 if they’ve used their benefit previously. Non-disabled vets can reduce the funding fee by making a larger down payment.

2. Often no minimum service requirement. Disabled vets usually qualify to receive VA loan benefits immediately, without having to wait the minimum required service days. However, even wounded warriors are required to meet certain credit and income minimums to receive a VA loan.

3. Grants for special accessibility modifications. For those who’ve suffered particularly debilitating injuries, the VA offers Specially Adapted Housing (SAH) grants. These grants pay for mobility modifications and help make homes more accessible.

Serving our country is commendable. Individuals who do so deserve certain privileges. The VA mortgage program is an excellent opportunity to save veterans thousands of dollars. Call today and let American Financing’s mortgage specialists help you make the most of your benefits.

 

Carrie Niess is a copywriter for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.

 

Mortgage Before Marriage – How to Prepare

Couple looking at a potential new home

By: Carrie Niess

First comes love, then comes homeownership…that’s right, many people (not just millennials) are foregoing weddings and marriage and are instead jumping into down payments and mortgages. Either way, you’re looking at a huge commitment. What’s right for you? Only you can answer that. But here are a couple things to consider before signing a mortgage with your significant other:

  1. Defining your title – you may not be thinking about becoming or adding a Mrs. in your relationship, but you do need to consider how to handle the property title. Unmarried couples have more options than you might think. So, be sure to research what makes sense for you: sole ownership, tenants in common, or joint tenants. Don’t be afraid to consult a real estate attorney.
  2. Committing to finances – it’s important to keep track of who paid for what. Regardless of what your relationship is like now, things can change over time. Consider consulting with an attorney to help draft written agreements for both parties to sign. Yes, agreements is plural, and The Mortgage Reports explains what they are and why they’re needed.

As you may already know – since you aren’t rushing to the altar before making an offer on that house – a wedding license does not equal automatic mortgage approval. Lenders don’t look at combined or average credit scores. They look at each individual’s score. So, be sure your credit is healthy, and be sure you understand what you can and cannot afford. You likely don’t have joint finances, so take the time to prepare before making any offers. Once you feel comfortable with your credit score, a helpful tool may be calling a mortgage lender to see what you can pre-qualify for. Get started online now.

As importantly, enjoy the experience! It can be uncomfortable to prepare for the worst, so certainly make time to celebrate purchasing a home and making it your own.

 

Carrie Niess is a copywriter for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.

Refinance Tips: 6 Things to Do Before Interest Rates Go Up

By Tim Beyers

Sometimes Scrooge arrives before Santa. In December, the Federal Reserve played miser when it bumped the cost of short-term debt by a quarter point. Consumers may not want to wait for the agency to act. Here are six refinance tips you can take advantage of now if you’re looking to cash in at todays historically low mortgage rates to pay off credit card debt, retire student loans, or fund home improvements

  1. Check your credit score. Also known as your FICO score, this number can range from as low as 300 to as high as 850. To check your score for free, use Mint for your personal finances—the score is updated regularly—or a distinct provider such as Credit Karma. Be sure to look at the factors impacting your score. Are there things you could do to improve? If so, make those changes immediately and document what you’ve done.
  2. Pull a credit report and correct any errors. Credit ratings agencies such as TransUnion, Equifax, and Experian compile events and account history in lengthy reports that includes your FICO score. Thankfully, the Fair Credit Reporting Act guarantees consumers access to these reports, free, at least once annually by visiting this site. Look for negative items listed. Are you being unfairly targeted for a late payment that was forgiven or a credit card that isn’t yours? So long as you can provide paperwork that provides proof of your claim, it’s possible to fix these and other errors and improve your credit score.
  3. Look at your whole financial picture. What can you really afford? Do you know? Our mortgage loan calculator can tell you a lot. Or if your situation is more complicated, consult with a tax accountant or a fee-only financial advisor before deciding how best to use home equity when refinancing.
  4. Check the value of your existing home if you have one. Years of increases the average value of home prices has been a boon for current homeowners. If you’re among this privileged list, it may be worth checking the value of your home. Do more than check proprietary sites. While they can give you a sense of what your home might be worth in ideal conditions, you also want to know how the market is performing. For that, try the “sold homes” search engine at Realtor.com. Put in your zip and then use the filters to find homes that are close matches for your own that have sold recently.
  5. Shop around for rates. Mortgage interest rates can vary widely. Shop around online to get a sense of the range of available deals. Then, take those figures to a trusted agent to see what’s realistic and what isn’t given your financial situation. Just searching for “mortgage rates” on Google will bring you to a number of the most popular aggregators of current rate information.
  6. Get help from an expert. Once you’ve checked your credit, assessed your financial situation, and learned more about current rates and the potential value of your home, it’s time to call up an expert and run the numbers. A good mortgage partner should not only be able to tell you what you can afford, but also the kind of deal you should seek and what it will cost you all-in—no surprises. Avoid commission-only loan officers who get paid to rush you into an expensive deal.

At roughly 4 percent for a 30-year mortgage, today’s rates are a bargain by historical standards. But they may not stay that way for long. Do your research, shop around, and if you’re thinking of making a move, involve an expert who can help you get the best deal.

Tim Beyers is a mortgage analyst for American Financing, a national company employing salary-based mortgage consultants dedicated to helping homeowners make smart mortgage decisions that align with their unique financial goals.