Colorado Home Buyer’s Guide
The real estate market in Colorado is hot right now. Supply is low and houses are selling fast. If you’ve decided that this summer is the time for you to buy, then be armed with the proper knowledge and find a lender that’s right for you. Here are four tips in choosing a good lender:
1. A good lender acts like your partner, helping you get the type of loan and terms that best fit your needs. The lender will need to know your financial situation—your income, assets, current debts, and credit history—to be able to tell you what kind of loan he or she can offer you. A good lender will explain all of your options, show you how the payments would differ under various scenarios, and help you decide which loan makes the most sense. Deciding on the loan type will depend on factors such as your budget, how long you expect to stay in the property, and what you anticipate your future income to be.
2. It is wise to choose a lender who has placed loans locally. Many sad stories are told about individuals who applied for a loan online and sent in an application fee, but never received the loan funds. Colorado has some unique real estate practices, and if the lender has not made loans in Colorado, then you are taking a risk by using that lender.
3. You will want to choose a lender who offers the right type of loan at the lowest rate available. It is best to contact a few lenders when you are shopping rates and include at least one mortgage banker (funds the loan directly) and one mortgage broker (works with a variety of companies or investors). On any given day, you may find a better loan package for yourself with one or the other. When comparing rates, it is imperative to get quotes on the same day. Interest rates vary daily and often fluctuate during the day.
4. Compare the fees that the lender will charge you for the loan. Real estate agents often refer to most of these lender charges as “junk” fees. Some examples of these fees are: document preparation; underwriting fee; escrow fee; origination fee; credit report; and an appraisal fee.
The best way to compare lender fees is to obtain a Good Faith Estimate of your costs from each lender. The Real Estate Settlement Procedures Act (RESPA) requires the mortgage banker or mortgage broker to deliver or mail the Good Faith Estimate to you, the applicant, within three business days after the application is received.
The process to finance the purchase of your home is complex and choosing a lender is just the tip of the iceberg. Checkout the “Colorado Home Buyer Guide ” by Vicki S. Porter to become fully equipped with the knowledge needed to successfully purchase your new home.