August 2019 - Springs Home Mortgage

Factors that Impact Your Credit Score

Posted on August 22, 2019September 15, 2020 by madmin

Credit scores play a role in many aspects of your financial life. Not only lenders but utility and management companies all use these rankings to determine if you are a financial risk. The greater the risk, the more it will cost you.

The major credit reporting agencies: Equifax, Experian, and TransUnion report your payment histories to FICO and VantageScore. Several factors effect credit scores and you can take control of each of them.

5 Factors Effecting Credit Scores

1. Bill Payment History

Creditors and other businesses report your borrowing and payment behavior to the major credit reporting agencies. This is an ongoing process, usually monthly. Consequently, the slightest deviation from on-time payments can hit credit scores. Pay on time.

2. Amount of Credit You Use

Just because you were awarded a line of credit does not mean lenders look favorably when you overuse credit. Your “credit use ratio” accounts for about a third of your FICO score. Your score will be higher when you keep all balances below 30 percent, preferably below 10 percent, of your credit limit.

3. Credit Mix

The best credit scores combine information taken from several types of loans. Revolving debt including credit cards is riskier as the debt can run high. In contrast, fixed balances carried through installment loans signal fixed payments over a fixed term. You might use an installment loan to buy furniture or a car. Having a mixture of debt types–mortgages, personal loans, student loans and other types of credit history–can improve your score by 10 percent.

4. Credit History – Past and Present

Fifteen percent of your credit score is determined by the age of the line of credit. A longer credit history provides lenders with more data. Newly opened accounts can be problematic, even if they do increase your total line of credit.

5. Credit Inquiries

Lenders looking at your credit to allow you to borrow money can affect your credit score. Try to limit hard inquiries and opt for allowing soft inquiries. Most of all, do not apply for too many loans at one time.

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To help you find the best mortgage for you, contact Springs Home Mortgage, contact Keith Courlas at (719) 470-0898, 5585 Erindale Drive Suite 201, Colorado Springs, CO 80918.

Down Payment Assistance Programs (DPA) – Costs and Benefits

Posted on August 21, 2019September 15, 2020 by madmin

If first-time buyers need down payment help, they can consider applying for Colorado’s CHAC program. CHAC offers low interest, flexible loans for buyers in both the low-income and moderate-income brackets. The program helps qualified first-time homebuyers obtain a second mortgage that can be used for down payment and closing costs.

The CHAC loan will close at the same time as the first mortgage. This loan that must be repaid, usually through monthly payments, and it may be prepaid at any time without penalty.

Additional Requirements

Applicant income restrictions are based on the Area Median Income or AMI. In most areas of Colorado, applicant income may equal 80 percent of the AMI. In Arvada, it’s 100 percent of the AMI. In addition, borrowers contribute a minimum of $1000 to the transaction, or $750 in the disability program. This money must come from the borrower’s own funds.

Remember this is a loan and it will be serviced by the Colorado Housing Assistance Corporation (CHAC). Before applying for CHAC down payment aid, the homebuyer must complete CHFA/CHAC-approved classes for first-time homebuyers. See CHAConline.org for more information.

How Do You Apply for CHAC?

CHAC partners with your primary lender. You will apply for CHAC through your first mortgage lender. After you select your mortgage package and the property goes under contract, the primary lender will apply to CHAC on your behalf. Terms vary depending on the primary loan package. The terms of your CHAC down payment package could be different from other borrowers. Although CHAC will communicate with you through your lender, you are always welcome to call CHAC directly if you have questions.

Finalizing the CHAC Loan

After the CHAC loan is approved, you will need to sign several documents and legal disclosures. The details of your CHAC loan, including the amount, the terms, and the fees will be revealed on these documents. In addition, CHAC may request you to certify some information. Examples include:

Proof that you have not owned interest in a principal residence for the past three years
Promise that you intend to occupy the new property as your primary residence
Certification that you do not own other residential property
Full disclosure of the income and assets of all persons who will be occupying the home
Proof of legal residency for all members of the household

The requested signed documents need to then be returned to CHAC. Then you will attend a borrower counseling session in person or via phone.

To help you find the best mortgage for you, contact Springs Home Mortgage. Contact Keith Courlas at 719-470-0898 to take your first step. Springs Home Mortgage, 5585 Erindale Drive Suite 201, Colorado Springs, CO 80918.

FHA or Conventional? What’s Right for Me?

Posted on August 21, 2019September 15, 2020 by madmin

Most homebuyers choose FHA loans and conventional loan products. Which one might work best for you? Do you know the difference between FHA and conventional mortgages? Benefits and costs vary quite a bit. Let’s compare the basics. One type of loan will better help you achieve your homebuying goals.

Conventional Loans - Colorado

Conventional loans appeal to borrowers who have good-to-excellent credit while the FHA loan package accommodates lower credit scores. Lenders usually require higher down payments for conventional packages than they do for the FHA packages. Applicants with a few of the following qualities are good candidates for conventional loans:

Credit score of 640 or better
Good Income
Saved larger down payment of 20 percent
Plan to buy a home priced over $340,000

Conventional loan products allow borrowers to apply for higher loan amounts. For single family homes, the amount in El Paso County, Colorado goes up to $484,350. The loan limit increases for 2-unit, 3-unit, and 4-unit properties where it reaches more than $800,000.

Down payment requirements also depend on the type of conventional loan. Normally, 20-percent down is standard and advisable. But the down payment may be reduced to 5 percent or lower. For example, the Conventional 97 loan requires a 640+ credit score and only 3 percent down. At times these borrowers must keep money in reserve.

Mortgage insurance costs are less expensive with conventional loans. Lenders look at loan-to-value ratios. Private mortgage insurance (PMI) is optional for buyers who put down at least 20 percent. Money can be saved down the line. PMI is also optional after any mortgage is paid down to 70 percent of the home’s value.

Some borrowers run into snags with conventional loans. Those people take a harder look at the large down payments. But they might also find it more difficult to qualify for a conventional loan, especially since a higher credit score is necessary. In addition, interest rates are higher with conventional loans. This is mostly because the loan amounts can be higher and therefore riskier for lenders.

Large down payments and higher interest rates deter some folks from choosing conventional loan products. So, they look to the FHA loans.

FHA Loans in Colorado

The FHA tends to be more flexible than the conventional loan. Lenders offering FHA loans accept credit scores down to 580. In addition, the FHA loan package comes with lower mortgage interest rates. The big advantage of the FHA mortgage comes down to the ability to get into a home with lower credit scores and less cash on hand.

Credit scores 580 and above require just 3.5 percent down payments
Credit scores of 500-579 require 10 percent down payments

Applicants do not need money in reserve either. To help even more, a third party may gift both the down payment and the closing costs. These doable cash requirements are all-important for some borrowers.

Disadvantages of FHA loans often cause homebuyers to look further or to save more. Buyers are faced with lower maximum loan limits than conventional loans. They may send them to the FHA-approved condo market. Mortgage insurance/PMI is a requirement for all FHA loans, even with 20 percent down. Its monthly cost is substantial and lasts for the life of the mortgage.

To help you find the best mortgage for you, contact Springs Home Mortgage.

*Loan limits as of 08/13/2019 FHA loan limits are for El Paso County Colorado. Loan limits may vary by county and are subject to change. Please contact a loan officer for details.

What Every First-Time Home Buyer Should Know

Posted on August 21, 2019September 15, 2020 by madmin

Let’s discuss some important home loan information for first-time home buyers. When first time buyers delve into financing, they can bump into unexpected delays. That’s why the team at Springs Best Mortgage encourages new buyers to learn the ropes before shopping for homes or mortgages.
Remember, you want a manageable loan with monthly payments that fit your budget. Contact us to sit down and go over the basics. We adjust our guidance to fit your goals and circumstances. We can suggest reputable real estate agents and help with negotiations. Watch how Springs Best Mortgage goes all-in to make the home loan experience start a beautiful new cycle for you and your family.

Pre-Approval Process

The process begins with loan pre-approval. Zeroing-in on the best loan package will give you the best preparation. Springs Best Mortgage will discuss several loan options. Then it’s time to apply for pre-approval from your chosen lender. During the process, lenders will ask for details about your financial life. Lenders will need to see your personal information when you ask for pre-approval. They examine your income, assets, debts, liabilities, and credit score and history. Pre-approval puts you in charge of your time and money.

How Does Pre-Approval Help You?

Pre-approval is free and to your advantage. In fact, don’t even look at homes for sale until after you know how much the lender approves for your mortgage. Here are some advantages of pre-approval:

You will know which price range of homes to include in your search. (Or you may decide to go for less expensive homes so you have more discretionary income for travel, private schools, furnishings and landscaping, etc.)
Pre-approval convinces sellers of your earnest desire to buy a home. You might say it is a superior bargaining card in today’s competitive market.
The pre-approval process may alert you to problems with your credit score, funds on hand, or documentation and give you time to fix these issues.
Pre-approval gives you the ability to estimate money needed for down payment and closing costs.

Upfront Costs of Buying a Home

First-time buyers often do not understand transaction costs. At closing, about 3-5 percent of the mortgage value is charged for closing costs and lender fees. Regular closing expenses may be charged to cover loan fees, insurance, taxes, title charges, recording charges, and application fees. Occasionally, the seller or a family member may pitch in to cover these costs. However, your own savings helps keep your options open.

Keep in mind that your savings will improve your financial clout. A good down payment may not always be necessary but it sure helps save on interest costs over the life of the loan.

The Loan Process: What to Expect

Think about the home loan process as climbing a flight of stairs. We’ll show you how to take them lightly. Expect several steps like these:

Initial Meeting
Application
Gather Documentation
Get a Home Appraisal
Underwriting
Conditional Approval
Processing
Final Underwriting
Closing

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If you are looking for a home loan in Southern Colorado as a first-time buyer, call Keith Courlas at (719) 470-0898 to take the first step. Springs Home Mortgage, 5585 Erindale Drive Suite 201, Colorado Springs, CO 80918.

5 Factors Effecting Credit Scores

1. Bill Payment History

2. Amount of Credit You Use

3. Credit Mix

4. Credit History – Past and Present

5. Credit Inquiries

Apply Now

Additional Requirements

How Do You Apply for CHAC?

Finalizing the CHAC Loan

Conventional Loans - Colorado

FHA Loans in Colorado

Pre-Approval Process

How Does Pre-Approval Help You?

Upfront Costs of Buying a Home

The Loan Process: What to Expect

Apply Now

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(719) 470-0898