Colorado Mortgage & Refinancing

Last Updated on September 17, 2020 by Andrew Lee

Considered one of the most beautiful states in the country, Colorado has a lot to offer to its residents and visitors. And with its majestic natural beauty, comprised of canyons, forests, mountains, and rivers, coupled with its exceptional education system, it’s easy to see why it piques the interest of home buyers (Source: Livability.com).  

Although the overall cost of living in The Centennial State is higher than the national average (Source: Sperling’s Best Places), the high employment rate and income average can make up for it. Some of its best cities include Fort Collins, Colorado Springs, and Lakewood.

Home Values and their Affordability

In CO, homes have a current median value of $322,300 (Source: Zillow). At the moment, the mortgage rate average comes close to that of the entire country. It’s also worth noting that rates have gone down for the past few years. In 2014, the average 4.13% dropped to 3.88% the following year. The 2016 average is also lower than that of 2015.

Mortgage Types Borrowers Can Apply For

Homebuyers here have several mortgage options to choose from, but the two primary ones are fixed-rate mortgages and adjustable-rate mortgages (ARMs).

  • Fixed-Rate Mortgages: Most people looking to purchase a home apply for this type of loan, mainly because their monthly payments are guaranteed to remain the same throughout the term. Those who intend to stay in the same house for a decade or more will find this loan ideal for their needs. The term refers to the length of time a borrower can spread out repayments plus interest towards the mortgage. The most popular is the 30-year term, with rates averaging at 4.5%.
  • Adjustable-Rate Mortgage: ARMs have lower interest rates than the fixed-rate ones, and the state average of 3.62% proves this. Lenders attract home buyers by offering an “introductory” deal, also known as a “teaser rate.” Depending on the agreement, borrowers can enjoy a lower interest rate for one, three, or five years. After this, they can already expect the rate to move, typically in an upward manner, causing a change in their monthly payments.

Refinancing Basics

Those who already have existing loans can take advantage of refinancing, which can help them save money or avoid shocking spikes in their monthly payments. It comes in two main types, namely the rate-and-term refinancing and the cash-out refinancing.

The former allows a borrower to refinance the outstanding balance in order to lower the interest rate. The latter involves getting a new loan with an amount higher than the first loan’s balance to repay the original loan. They can then use the excess in cash form or use it to pay off other debts.

Help with Obtaining a Mortgage

Those in need of assistance with buying a home or avoiding foreclosure, the Colorado Housing Finance Authority (CHFA) can help. For help with making a down payment, buyers can apply for a CHFA Down Payment Assistance (DPA) grant. Qualifying for this means receiving a grant equivalent to 3% of an entire first mortgage loan. It doesn’t require repayment, and can serve as a means to make the down payment or cover closing costs. .

Other sources of mortgage aid come from the following:

  • CHFA’s Borrower Premium Program
  • CHFA Advantage mortgage
  • CHFA Preferred mortgage
  • CHFA SmartStep mortgage
  • CHFA HomeOpener loan program
  • Home Affordable Refinance Program

As a final reminder, borrowers should never forget that comparing mortgage rates can pave the way for them to finding a mortgage offer best suited for their needs. Through rate comparison, homebuyers can increase their chances of securing better rates, which can make a huge difference not just in monthly payments, but in the overall cost of getting a home loan.

References:

Colorado Housing Finance Authority: https://www.chfainfo.com/

Home Affordable Refinance Program: http://www.harp.gov/