CO Springs Mortgages - A Few Basics
For most of us, buying a home in Colorado Springs would not be possible without the help of a mortgage loan. Since mortgage loans are almost always an integral part of the home buying process, it's important to have a good working understanding of these loans as you prepare to buy a home. As your trusted real estate agent in Colorado Springs, I'm here to help you gain a basic understanding of mortgage loans and how they work.
Different Mortgage Types
Mortgage loans can be financed through a variety of different lenders and organizations, but there are two over-arching forms: traditional and non-traditional.
- Traditional Mortgages are typically available for fifteen, twenty, or thirty-year terms and usually require an initial down payment of at least 20%.
- Nontraditional Mortgages refer to all mortgages that do not meet the description of a "traditional" loan, such as loans adjustable rates or interest-only loans.
The type of loan you want will depend greatly on several factors, such as your credit score, the down payment you can afford to make, and how long you plan to stay in your next home. A mortgage lender will be able to help you evaluate which type of loan will best fit your family's exact needs.
The Approval Process
An loan application requires multiple steps and can take several weeks. Buyers must provide proof of their income, their bank statements, tax returns, and many more materials that will give the lender insight into the buyers' financial situations. The official loan approval process is too complicated to describe in a single blog post, but here's an extremely simplified version:
- Prequalification means that home buyers have spoken to a lender and, based on the information verbally provided by the buyers, the lender has provided a written statement claiming that he believes the buyer will qualify for a loan.
- Preapproval means that the lender has investigated the buyers' proof of income, assets, and other debts, and has tentatively committed to provide a loan to the buyers.
- Approval only comes at the very end of the process, after the property has been professionally appraised, an official title search has been conducted, and other measures have been taken to ensure the purchase of your home will go through smoothly.
In order to speed up the process, home buyers are strongly encouraged to get a headstart by getting preapproved (or at the very least, prequalified) before they begin looking for properties for sale in Colorado Springs.
Your Credit Score
Your credit rating will greatly impact the type of mortgage loan you are eligible for and how low (or high) your interest rate will be. Good credit is not built overnight; if you have a low credit score, most lenders estimate that it will take up to six months of concentrated effort to raise your score. Since it's never too soon to start boosting your credit score, here are a few habits you might want to adopt:
- Pay all balances in full every month. This applies to everything from auto and student loans to your credit cards.
- Keep outstanding balances low. If you have credit cards, try to keep your outstanding balance at 30% or less of your credit limit.
- Consolidate debt. Rather than running up small balances on multiple cards, select one or two main credit cards and use them to make all of your purchases.
- Open as few new lines of credit as possible. Opening new credit cards or taking out new loans drops your score. Only do so when absolutely necessary.
When you get a mortgage loan, your lender will conduct an incredibly thorough examination of your credit history. If you're thinking about buying property in Colorado Springs in the next several months (or even the next year), it's time to evaluate your credit score and start taking steps to improve it.
The MacGuire Team -
A Passion For Excellence
If you're ready to start looking at homes for sale in Colorado Springs, it's time to give The MacGuire Team a call! We have a great deal of experience in Colorado Springs real estate, and we would love to help you find the home you've been dreaming of. Give us a call today.
Mike MacGuire
Colorado Springs Real Estate Agent
The MacGuire Team
6760 Corporate Dr
Ste 300
Colorado Springs, CO 80919
719-536-4324 or 719-660-6793
Mike@BuyWithMike.com
Comments