First-time Homebuyers 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 homeownership. 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 homebuyers 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 homebuyers 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 homebuyers, 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 homebuyer education class to prepare for the responsibilities of homeownership.

  • Attend homebuyer 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 homebuying process, the inspection and appraisal process, and types of mortgages, among other topics.

“The homebuyer class was very helpful. CHFA really tries to help people make informed decisions and further understand the homebuying 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 homebuyer 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.

 

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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.

You Are Still Renting? Why?

Being a homeowner does not have to be a long-term aspiration. Among the many benefits of purchasing a home there are tax write-offs homeowners can take that are not available to renters. Homeowners are able to take a mortgage payment interest deduction, along with other deductions depending on their individual situation. These deductions often amount to a significant saving in the cost of owning a home.

home loan_interest rates_buy a home_low interest rates Purchasing a home also allows you to benefit from appreciation in home prices. When renting, only your landlord benefits from appreciation in real estate prices, in addition to receiving your large rent check each month. The argument for buying instead of renting only gets stronger with the low interest rates that are currently available. While interest rates have risen slightly over the past few months, they are still near record lows. Rates are predicted to rise throughout 2017, so now is the time to take advantage of these rates before they begin to increase further. Locking into a low 30-year mortgage rate today could save you hundreds of dollars each month for decades to come. There are also many attractive mortgage programs available for first time buyers. A lack of savings does not mean you are stuck renting. A qualified mortgage lender will be able to offer low down payment mortgage options, or find other mortgage programs that are best suited for your situation.

With all of the benefits associated with home ownership, you owe it to yourself to find out whether or not you are qualified to begin the home buying process. Taking the simple step of speaking to a qualified mortgage lender during this unique time of low mortgage rates, may be the smartest financial situation you can make thus allowing your family to make your monthly home payment towards your own asset instead of increasing your landlord’s wealth.

The Fed Just Increased Rates. Here’s What is Means to You.

Conceptual image - percent growth

Conceptual image – percent growth

The Federal Reserve met last week, raising the benchmark interest rate for the second time following the 2008 financial crisis.  Their decision to raise the target range for the federal funds rate from 1/2 to 3/4 percent did not come as a surprise for the country’s financial experts, with markets predicting a 100% probability of the increase prior to the meeting.

Overall, experts say that the Fed’s rate increase reflects its confidence in the economy. Additional rate increases are also predicted throughout 2017.

But what does this mean for you?

If you are planning on buying a house or refinancing your mortgage, do not let yourself make the mistake of putting the process off until next year. The predicted increases in the benchmark rate throughout the next year mean that mortgage rates will likely continue to rise. This month’s average mortgage rate of 4.3 percent remains near historic lows compared to rates of over 18 percent seen in the 1980s.

Your opportunity to take advantage of these low rates may not exist next year as rates increase. Taking the simple step of speaking to a qualified mortgage lender may save you hundreds of dollars each month as you lock yourself into a mortgage rate much lower than future home buyers will be able to secure.

Rate Volatility: Is This the Last Chance to Refinance?

Thinking about refinancing you mortgage? This may be your last chance to refinance while rates are still in the 3s. Mortgage rates have been volatile over the past month, representing a divergence from the consistent decline in rates over the past few years. Economists are predicting that mortgage rates will move into the 4s in the near future.

 Despite these recent increases, mortgage rates remain historically low. According to Freddie Mac’s weekly Primary Mortgage Market Survey, mortgage rates averaged 8.25% over the past 45 years. So while rates may be increasing, there is no limit to where they could go in the future.

Even if you think you’re not qualified to refinance, allow yourself to find out. Refinancing and locking in a rate while mortgage rates are still low could save your family hundreds of dollars each month though out the course of your mortgage payments. A qualified mortgage lender will be able to inform you about a variety of programs. You might be surprised by much money refinancing while rates are still low will save you and your family for years to come; don’t let yourself regret not finding out.

5 Mortgage Tips for Millenial Homebuyers

millenial

Getting a mortgage is often a daunting task for first time homebuyers. With a multitude of different types of mortgages and lenders to choose from, it can be difficult to know which options best fit your needs. Fortunately, there is an abundance of information available to help homebuyers, including millennials, find the optimal mortgage. Here are five mortgage tips for millennial homebuyers:

1. Find a Lender You Can Trust

It’s always important to find a trustworthy mortgage broker, but it is even more essential if you are new to the home buying process. A good lender will inform you of the different mortgage options available and move the process along as smoothly as possible. Look for a lender who pays their agents a salary rather than by commission so you know they will be working in your best interest.

2. Understand Different Down Payment Options

Not all mortgages require twenty percent down payments. If you do have the money at your disposal to come up a twenty percent down payment, there are various mortgages less than twenty percent down. In the case of VA mortgages, for instance, no down payment is required. Make sure to find a lender who can offers these various programs if you think you may want to pursue this option.

3. Improve Your Credit Score

Your credit score is an important factor in determining your eligibility to be approved for a mortgage. If you are in the earlier stages of planning, make sure to improve your credit score to the best of your ability. Paying outstanding debts and taking care of any disputes are two good ways to go about raising your credit score.

4. Manage Your Student Loan Payments

Many millennials have a significant amount of college debt. If you are part of this large group, you may believe that your student loans will prevent you from ever getting a mortgage and buying your first home. For many, though, this is simply not the case. Lenders use a debt-to-income ratio calculation to determine your eligibility for a loan, and managing your payments and optimizing your debt can improve your DTI ratio and allow you to qualify for a mortgage.

5. Get Pre-Approved

Getting pre-approved for a mortgage is a great first step as you begin to get serious about purchasing a home. This will help you to determine an appropriate price range for your housing search. You don’t want to fall in love with a house only to get denied for the necessary mortgage amount because it is too expensive!

5 Ways to Increase the Value of Your Home

Home Equity

Increasing the value of your home can be beneficial regardless of whether or not you are planning on selling your home in the near future. Besides the obvious advantages if you are planning on selling, increasing your home’s value may allow you to complete a cash-out refinance on your mortgage, enabling you to take advantage of the equity you’ve built and the current low mortgage rates. Here are 5 ways to increase the value of your home:

 

  1. Update Kitchen Appliances

 

Old appliances can make an otherwise desirable house appear outdated. Investing in new appliances that complement the design of the room will provide a great return on their cost and give your kitchen a significantly more modern and cohesive look.

 

  1. Take Care of Deferred Maintenance

 

Having a home with a little deferred maintenance like a leaking faucet or chipping paint can seem like insignificant factors in determining your home’s value, but these minor things can make your home less undesirable and decrease your home’s worth more than you’d think. Hiring a handyman to take care of the little things can go a long way.

 

  1. Make Sure Your Home is Light and Bright

 

Not having enough light in a room can make it seem smaller and more cramped than it really is. Adding nice chandeliers or light fixtures can also improve the overall appearance of a room. Purchasing a few lights for dark rooms and making sure that all of your current lights are in working are a few cheap and simple fixes that will undoubtedly pay off.

 

  1. Clear Away Cluttered

 

Clutter can make a home seem cramped and is often off-putting to potential homebuyers. Removing clutter and making sure that each room in your house is well organized are simple and completely free ways to increase your home’s value.

 

  1. Improve Curb Appeal

 

First impressions are important. Potential buyers could be immediately driven away from an otherwise perfect home by poor curb appeal. Landscaping is a great first step; cleaning up the lawn and planting some flowers and a few trees can completely change your home’s appearance.

5 Tips to Raise Your FICO Score Now

Good vs Bad Credit Sign

Raising your FICO score is an important step in obtaining a mortgage. Mortgage lenders use FICO scores to measure your risk of defaulting, so your score can have a tremendous impact on your ability to secure a mortgage. Your FICO score includes components like payment history, debt burden and credit card use. As a result it is vital to learn how your financial decisions can affect and improve your FICO score. Here are 5 ways to improve your FICO score now:

1. Check Your Credit Report

If you want to raise your FICO score, it is important to first check your credit report so that you’re aware of your present standing. Once you know the starting point of your credit score, you will be able to evaluate how much you will need to improve your score in order to get a mortgage. This should give you a better idea of the steps you will need to take to get your FICO score to where it needs to be.

2. Dispute Errors on Your Credit Report

When reviewing your credit report you may find that the data used to calculate your score contains errors. Use the information on the report to contact the appropriate credit bureaus with information to back up the inaccuracy. Resolving an inaccurate report of a late or missed payment is one of the most straightforward ways to quickly raise your FICO score.

3. Become an Authorized User

If your current credit score makes it difficult for you to obtain your own credit, becoming an authorized user on another person’s account can allow you to build credit and improve your FICO score. The authorized user will be able to make purchases on the account, and the entire account’s history will be factored into the authorized user’s report.

4. 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.

5. Improve Your Debt Utilization Ratio

Debt utilization is a another component of your FICO score which measures how much money you owe to 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%. The best way to improve this ratio is to pay off some of your debts, starting with the card that is closest to being maxed out. To improve your FICO score, you will generally want to keep your debt utilization ratio under 30%.