Guideline Updates

CHFA Down Payment Assistant Programs

What is CHFA?

CHFA’s mission is to strengthen affordable housing and economic development across the state. They offer many financial resources to strengthen homeownership, affordable rental housing, and businesses. They also offer education classes and technical assistance to help borrowers succeed.

CHFA has invested more than $10 billion in Colorado’s economy. Their resources have helped:

  • 84,472 Colorado homebuyers achieve homeownership;
  • 97,761 households attend homebuyer education classes held statewide;
  • 58,628 affordable rental housing units be developed or preserved; and
  • 3,670 business access capital to support 49,570 jobs.

Home Finance Programs:

borrower qualifications vary by program; however there are certain ones that apply in all or most instances:

  • No first time homebuyer requirements on most loan programs
  • CHFA-sponsored homebuyer education required with purchase programs and CHFA Mortgage Credit Certificates (CHFA MCCs)
  • $1,000 minimum borrower contribution required (may be a gift) on most loan programs

You will find below a brief overview of CHFA programs, along with key benefits of each to help you determine which might be best for you.

 

home finance program comparison chart

Take the next step towards your future with confidence by financing your home with Colorado Housing and Finance Authority (CHFA). Need Help feel free to call us with any question at (303)-444-5251 or email at info@cmglending.com.
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Down Payment Assistance Grant-CHFA

CHFA Grant Program

The number one hurtle first time home buyers constantly struggle with is the traditional down payment needed to start your investment.  If having a down payment has been a source of frustration in the past, you are not alone.  CHFA has a down payment assistant grant created to help Colorado residents become home-owners.  CHFA’s new grant is available to either first-time or non-first-time homebuyers under most of its 30-year, fixed rate, first mortgage loan programs. Borrowers who meet income requirements, have a mid-credit score of 620 or higher, contribute $1,000 toward the transaction, and complete a CHFA homebuyer education class (online or in-person) prior to loan closing may be eligible. 

CHFA has been offering down payment assistance in various forms since 1991, and this is the first time in more than 10 years CHFA has offered a grant as part of its loan programs for homebuyers. The CHFA grant program may be used toward the down payment, closing costs and/or other fees. ​ Below is the details to get started moving forward today.

How much Assistance can I get?

You can get a grant for up to 3 percent of your first mortgage loan to help cover some of your down payment and/or closing costs.  That would mean up to a $5,100 for a $170,000 for your first mortgage loan.  Another benefit of this program is you never have to pay it back.  With the CHFA DPA grant, you can have the freedom of owning your own house and not stress about ever paying it back.  

 How can this Grant be used? mountain home colorado photo

  • Save money up-front
    Use the CHFA DPA Grant to help with your down payment, closing costs, and/or prepaids.
  • Keep your savings
    Use the CHFA DPA Grant and keep more of your money in savings.​
  • ​Improve your new home
    Use the CHFA DPA Grant to leave more of your money available to make your home your own​.​

How To Qualify:

  • Your total household income and the purchase price must be within the limits. Income Limits can be found at: http://www.chfainfo.com/participating-lenders/single-family/forms/CHFA_Income_Limits.pdf
  • You must complete a CHFA homebuyer education class (online or in-person) prior to loan closing
  • You must contribute a minimum of $1,000 toward the purchase of a home
  • You must have a mid-credit score of 620 or higher

Looking to the Future

Want help or advice to start moving forward into a new home, we would love to help at Colorado Mortgage Group. Call today at (303) 444-5251 or email us at Info@cmglending.com.




New FHA County Loan Limits for 2016

Loan Limits in the State of Colorado

What is a Loan limit? Loan limits have a definition very closely related to their name. A loan limit is the maximum allowable loan size for a mortgage. Loans for amounts above loan limits cannot be approved. Mortgage loan limits can vary by product and by ZIP code. An example would be the particular loan limits set for FHA Loans that differ from Fannie Mae or Freddie Mac.  A VA which is managed by the Department of Veteran Affairs also has a different set of specific limits.  For 2016, the limit for all counties is $417,000 for single-unit homes.  This is the set default mortgage loan limit nationwide.

The Federal Housing Administration released its maximum mortgage limits for 2016 on Wednesday December 9th 2015.  Limits will increase in 188 counties due to the changes in home prices, and no counties will have decreasing loan limits.

Below are are the Colorado limits for 2016 and the previous years limits:

  • Adams County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Arapahoe County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Boulder County, Colorado 2016 Loan Limit: $474,950 (2015: $456,550)
  • Broomfield County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Clear Creek County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Denver County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Douglas County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Elbert County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Gilpin County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Jefferson County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Park County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)

What Are My Options As A Borrower?

Want help choosing a loan program listed below are the general details for conventional, FHA, and VA programs.

Conventional

  • No Overlays
  • PIW’s accepted
  • 97% LTV – Fixed
  • 90% LTV – 5-7 year ARM’s
  • 620 Min FICO
  • Fannie Mae & Freddie Mac
  • LPMI Available
  • DU Refi Plus and Open Access

FHA

  • Make Sense Underwriting
  • FICO’s down to 580
  • Streamlines to 580 (mortgage only credit)
  • Extra .5% for purchase above 680
  • Extra .5% for streamlines

VA

  • Make Sense Underwriting
  • 100% Cash Out
  • FICO’s down to 580
  • Streamlines to 580
  • Extra .5% for purchases above 680
  • Extra .5% for streamlines



Freddie Mac Home Possible Advantage Mortgages

Program Overview:

Are you currently looking for a new house, or have you been frustrated with the process in the past? Freddie Mac Home Possible advantage mortgages offer outstanding flexibility and options to help meet your needs. With Home Possible, you’ll capitalize on opportunities to meet the home financing needs of low- and moderate-income borrowers looking for low down payments and flexible sources of funds. Freddie Mac Home Possible AdvantageSM offers more flexibility for maximum financing. This offering adopts the responsible and affordable flexibility of Home Possible, but with additional requirements. Below are some of the key features of the Home Possible Advantage Mortgage.

Feature Home Possible Home Possible Advantage
Property Types
  • 1- to 4-unit primary residences
  • Condos
  • PUD
  • Manufactured homes (with restrictions)
  • 1-unit primary residences
  • Condos
  • PUDs
Eligible Mortgage Products
  • Fixed-rate mortgages.
  • 7/1 and 10/1 ARMs if secured by a 1- or 2-unit primary residence.
  • 5/1 ARMs if secured by a 1- or 2-unit primary residence other than a manufactured home.
  • Construction Conversion and Renovation Mortgages.
  • Mortgages with an RHS Leveraged Second.
  • Fixed-rate mortgages.
  • Construction Conversion and Renovation Mortgages.
Maximum LTV/TLTV Ratios
  • For Home Possible: LTV/TLTV/HTLTV ratio of 95 percent.
  • For Home Possible Advantage: 97 percent LTV/ 105 percent TLTV.
Eligibility/Underwriting A Home Possible mortgage may be submitted to Loan Prospector® or may be a manually underwritten mortgage. See Guide Section A34.8 for credit underwriting requirements.
Requirements for Minimum Borrower Contribution and Sources of funds See Guide Section A34.10 for requirements on minimum contributions from borrower personal funds, reserves and permitted sources of funds.
Homebuyer Education See Guide Section 34.12 for homeownership education and landlord education requirements related to:

  • Borrower(s) who are all first-time homebuyers.
  • Restrictions on parties that may provide the homeownership education.
  • Homeownership education documentation  that must be retained in the mortgage file.
  • Acceptable types of homeownership education, including Freddie Mac’s CreditSmart®
  • Borrower disclosure requirements.
  • Landlord education (2- to 4-unit primary residences) requirements for purchase transactions.
Delivery Fees See Guide Exhibit 19 for:

  • Special postsettlement delivery fees are applicable to Home Possible mortgages and Home Possible Advantage mortgages.
  • Delivery fee exclusions.
Special Delivery Requirements See Guide Section 17.18(b) for special delivery instructions for Home Possible mortgages.
Single-Family Seller/Servicer Guide Refer to Guide Chapter A34.

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Key Features and Flexibility

  •  Fixed-rate mortgages with a term of up to 30 years.
  •  Eligible properties: one-unit properties, condominiums, and planned united developments. (Manufactured homes are ineligible.)
  •  All borrowers must occupy the property as their primary residence.
  •  Maximum loan-to-value (LTV) is 97% and maximum total loan-to-value (TLTV) is 105%.
  •  Reduced mortgage insurance coverage (18%).
  •  Temporary Subsidy Buydown plans lower initial monthly payments.
  •  No reserves required.
  •  More eligible sources of funds for down payment and closing costs.
  •  Eligible annual income up to 100% of Area Median Income or higher in select counties and no income limit in underserved areas.
  • May be submitted through Loan Prospector® or manually underwritten

Benefits

  • No minimum borrower contribution from borrower personal funds.
  • Gift from related persons and other sources of funds permitted for down payment and closing costs.
  • Lower monthly payments from reduced mortgage insurance coverage levels.
  • Lower monthly payments means less income needed to qualify.
  • No minimum LTV limit.
  • No reserves required, lowering cash needed to close.
  • Flexible closing cost funding options.

Home Possible Advantage or FHA?

Comparison of Home Possible Advantage with monthly PMI vs. FHA using $150,000 sales price.

30-year fixed rate mortgage scenario Home Possible Advantage
18% Monthly MI Coverage
4.375% Note Rate**, 97% LTV
FICO Ranges 680-719 / 720-759
FHA No FICO Cuts 3.750% Note Rate* 96.5% LTV
Base Loan Amount $145,500 $144,750
Upfront MIP Rate (%) 0 1.75%
Upfront MIP Cost ($) 0 $2,533
Total Loan Amount $145,500 $147,283
Down Payment $4,500 $5,250
Monthly MI Rate (%) .80%/ .60% 0.85%
Monthly MI ($) $97/$73 $102
Principal/ Interest $726 $682
Total Monthly Payment $823/$799 $784

 

The Freddie Mac Home Possible advantage mortgage could be a great option. Call today to get more information and started on the loan process today!




Doctor Loan

Loan Overview:

Has heavy loan dept been a barrier to purchasing a home in the past? You aren’t alone. Student loan dept is cited as being one of the most challenging struggles to people from the ages of 25-34 entering into a house of their own. For those coming out of medical school Colorado Mortgage Group is offering a loan program to help.  This mortgage program has been created to help meet the needs of doctors just getting started on their career. Physician loans make qualifying easier, lower down-payments, and flexible insurance options.  One borrower must have a medical license. Eligible borrowers with student loan debt that is in deferment for 12 months beyond the Note Date are not required to include the deferred debt in the debt-to-income (DTI) ratio calculation.

Loan Amounts

Maximum: $850,000

Minimum: $20,000

Eligible Borrowers

At least one borrowers must hold one of the following valid license type and have student loans currently deferred for 12 months or more:

  • Medical Doctor (MD)Doctor photo
  • Medical Resident (Educational License)
  • Doctor of Dental Science (DDS)
  • Doctor of Dental Medicine or Surgeon (DMD)
  • Doctor of Optometry (OD)
  • Doctor of Ophthalmology (MD)
  • Doctor of Pediatric Medicine (DPM)
  • Doctor of Osteopathy (DO)

Ineligible Borrowers

  • Non-residential aliens
  • Non-permanent resident aliens
  • All trusts
  • Land trusts, except for Illinois Land Trust
  • Non-occupant co-borrowers
  • Limited Partnerships, general partners or corporations
  • Non-arms-length transactions

Eligible Property Types

  • 1-unit properties
  • Fannie Mae warrantable condominiums
  • Planned unit developments (PUDs)
  • Modular homes

To qualify you must have a minimum credit score of  700.  Colorado Mortgage Group is currently offering 5/1 adjustable rate at a term of 30 years and a 7/1 adjustable rate at a term of 30 years.  To see if you qualify or for additional assistance please call us at (303)-444-5251 or email at info@cmglending.com.




FHA Condominium Project Approval

FHA Guideline Update:

Thought about purchasing a condominium in the past? FHA has just announced that is will be changing its rules to make it easier for buyers to get federally insured financing.  This is good news because traditionally condos have been a great way for first time home owners to step into a house.  Under new FHA guidelines second homes are no longer considered “investment property” for determining the owner-occupancy ratio of a condominium project.  Looking back before the change if someone had owned a unit in a condo project, and used the unit as a second home, that unit doesn’t count as part of the project’s 50-percent owner-occupancy threshold, which is required by FHA.  This meant that if someone wanted to own a unit in that project and fewer than half the units where owner occupied the borrower couldn’t get FHA-backed financing.

Today the FHA has widened its guidelines.  Below are the new guidelines provided by FHA:

The procedure for calculating the required owner-occupancy percentage is modified to allow units that are not investor-owned to be considered owner occupied for the purpose of Condominium Project approval. For the purpose of Condominium Project approval, a unit is considered to be investor-owned if the unit is:

• Tenant Occupied;

• Vacant and listed for rent;

• Existing (previously occupied), vacant and listed for sale; or

• Under contract to a purchaser that does not intend to occupy the unit as a Principal Residence or Secondary Residence. The term Principal Residence and Secondary Residence have the same meaning as defined in Handbook 4000.1.

For purposes of calculating the owner-occupancy percentage:

• on multi-phased projects, the owner-occupancy percentage is calculated on the total number of units in the first declared phase and cumulatively on subsequent phases; or

• for single-phase condominium project approval requests, all units are used in the denominator when calculating the required owneroccupancy percentage.

Streamline Condominium Re-certification:

FHA-approved condominium projects require re-certification after two years to ensure that the project is still in compliance with FHA’s eligibility requirements and that no conditions currently exist which would present an unacceptable risk to FHA.  For existing condominium projects seeking re-certification, FHA will now only require applicants to submit documents reflecting any substantive changes since the project’s prior approval.

 

For any questions or to take steps to get into a new condo. please call (303) 444-5251 or email us at info@cmglending.com.




New Mortgage Guidelines Starting October 3, 2015

 New Mortgage Rules Aim To Simplify Information But May Slow Down The Process

As of October 3rd, the TILA-RESPA Integrated Disclosure Rule (TRID) will require lenders to provide potential borrowers with more detailed rate and fee information. This process will also give borrowers more time to review documents before closing.

When you think about buying a house, many questions may come to mind. Having the necessary information to make informed educated decisions is an important step in the mortgage loan process. Starting on October 3rd, 2015, new guidelines and regulations will aim to provide more details.  Mortgage rates and fee quote documents are a few of those details. What does this new regulation mean looking forward, and for those looking to get started in the journey of purchasing a home?

Guideline Background:

There are two regulations that are designed to protect borrowers from fee abuses currently:

  • The Truth In Lending Act (known as TILA or Regulation Z) established in 1968. This act protects borrowers from unforeseen closing cost abuses. The way in which it does this is by creating standards for the way mortgage fees and terms are calculated and communicated.
  • The Real Estate Settlement Procedures Act (known as RESPA or Regulation X) created in 1974.  This act aims to protect borrowers from false inflated real estate transaction costs.

As of October 3, 2015, the CFPB (Consumer Financial Protection Bureau) will bring together the two regulations mandated under TILA and RESPA into a simpler form. This is called the  TILA-RESPA Integrated Disclosure Rule, or commonly known as TRID.

With these new disclosures, the process might be slower-especially as lenders get used to the new rules.

Looking to the Future: 

Here is What Happens Prior to October 3rd:

  • Within three days of you applying for a home purchase loan, the lender must send you a Good Faith Estimate and an Initial Truth In Lending disclosure, these will show your quoted rate, sum of fees, terms and costs over the life of the loan.
  • Before closing (even if it’s the day of closing, which it often is), the lender will send you a HUD-1, which is a breakdown of all fees for the transaction, and a final Truth In Lending disclosure this will allow you to see if there have been any differences from the beginning.

Today’s process has been deemed too confusing and complicated by the CFPB.  The first time a borrower sees a HUD-1 which contains a formal breakdown of all the fees is at the closing table.  By that point it may be too late to make changes the borrower may see in their favor. In light of this information under the new TRID rules all new applications after October 3 will receive two disclosures.  One will be at the beginning and one will be at the end.

  • Within three days of you applying for a home purchase loan, the lender must sent you a Loan Estimate Form, which provides a detailed line-item breakdown of fees, cash needed to close, rate, terms and costs over the life of the loan. The lender must also obtain your intent to proceed before they can move forward.
  • At least three days before closing, the lender must send you a Closing Disclosure Form, which looks almost exactly like the Loan Estimate, but also separates which costs are paid by the buyer, seller, and third parties. What this means for the borrow is that you will have more time to make decisions and review the final terms of your agreement.

There will be some growing pains in the near future, as lenders, brokers, and other key players figure out the details of this new regulation. Talk to your lender today and ask what starting the lending process could look like for you.




How To Avoid Common Mortgage Approval Mistakes

The mortgage process can be an in depth process as well as time consuming. Ask your mortgage lender to help you during this season of your life.  Below are a few common mistake to avoid that will simply obtaining a mortgage approval. Stay clear of the following:

1. Avoiding or Leaving Out Information on Your Financial Profile

Colorado Mortgage Group will begin by reviewing your personal information.  This information will include employment, income, residence history, debts, and assets. The important take away is to answer every question and be truthful.  If every question about your financial profile isn’t answered, it has the potential to derail the loan process. It is better to know everything up-front so we can handle it before it becomes an issue.

2. Documentation, make sure you have everything

Your lender will next ask you for detailed documentation which may include:documentation photo

  • 30 days of pay stubs
  • Two years of tax returns and W-2s
  • Year-to-date business financial statements if you’re self-employed
  • Two months of statements for all asset accounts
  • Explanations and paper trails of all deposits (and often withdrawals)
  • A home insurance quote with adequate coverage
  • Full financials on any other homes or businesses you own

If any document is missing, providing it will be necessary to move forward. Colorado mortgage group will also run your credit, which can reveal employers, addresses, debts and other credit inquire. If new information comes to light, you’ll be required to explain and document all of it.

3. Pre-approval is not loan approval

You should consider your loan approved by an underwriter before you write any offer to buy a home. Lets talk about the difference between being “pre-approved” and obtaining loan approval.  Getting a mortgage “pre-approved” means you’ve talked to a lender, and provided the necessary documents listed above, and your personal profile looks good. This does not however mean you have loan approval.  The next step would be to get “underwriting approved”. This would mean obtaining a formal loan commitment in writing.  When this step has been accomplished your loan approval is official. Your Colorado Mortgage Loan officer will be the one to submit your file to an underwriter.

4. Not knowing what is realistic or being uninformed about rates

Avoid surprises when is comes to rates and get your lender to quote a rate based on your closing timeline.  Remember rates change daily.  Rates are based on how long they’re locked, for example a shorter lock at 15 or 30 days will have a lower rate that a longer lock such as 60 days.  As the borrower you are under rate market movement until you’ve entered into contract.  You are in contract when a seller accepts your offer.  It is key to know that before entering a contract you cannot lock a rate, this is because a rate is linked with the borrower and the property. Colorado Mortgage Group Publishes our rates online. These are the same rates you will receive when you call us for a quote.

 




FHA Reverse Mortgage (HECM)

What Is A Reverse Mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity or wealth in your home into cash. The wealth that you acquired over the years of making mortgage payments can be paid to you.  However, unlike a traditional home equity loan or second mortgage, Home Equity Conversion Mortgage (HECM) borrowers do not have to repay the HECM loan until the borrowers no longer use the home as a primary residence or are unable to meet the responsibilities of the mortgage. How a reverse mortgage works is, the borrower receives money from the lender. The money you receive, and the interest charged on the loan, increases the balance of your loan each month. Over time the loan amount will grow. Equity is defined as the value of your house minus the amount of loan, therefore as time goes on you will have less and less equity in your house as your loan balance increases.  Reverse mortgage loans are often used to pay for home renovations, medical and daily living expenses. Homeowners who have an existing mortgage often use the reverse mortgage loan to pay off their existing mortgage and eliminate monthly mortgage payments.

Qualifying For a Reverse Mortgage:

  • You must be at least 62 years old.
  • The home must be your primary residence.
  • You must have significant equity remaining in your home after paying off any existing mortgages with the new Reverse Mortgage.

Distribution of Funds:

There are a combination of ways in which a reverse mortgage could be received:

  • Term: a monthly payment for a specific length of time.
  • Tenure: monthly payments for the life of the loan
  • Lump sum: a sum of cash at the time of closing
  • Line of Credit: just as with a credit card you can draw money as needed up to set eligible amount

Is A Reverse Mortgage For Me?

Still have questions, discuss your desired future financial plans with family, friends, or trustworthy people in your life. A reverse mortgage may be a sound financial decision, however there may also be a better option out there for you. If you have more questions please feel free to contact us.




How to Improve Your Credit Score

Increasing Your Credit Scorethumbs up photo

A credit score reflects credit payment patterns over time, with more emphasis on recent information. You can check your credit report to read a summary of what goes into your credit score. Take the following steps to improve your credit score.

  1. Pay your bills on time. Late payments can have a major negative impact on credit score.  Paying your bills on time is the most important contributor to a rising credit score.  Let’s say you own a small amount of debt, it is important that you keep your payments on time.  A Few other tips would be, minimizing outstanding debt, avoid overextending yourself, stay away from applying for credit needlessly.
  2. Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a credit score. Keep in mind that the small balances you might have on a number of credit cards, eliminating nuisance balance is a great way to help your credit score move in an upward direction.  The reason this strategy could work is because one of the items that influences your score is how many of your cards have balances.
  3. Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix. It probably won’t improve your credit score.
  4. Pay off debt rather than moving it around.
  5. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
  6. Keep good old debt on your record.  What is good debt?  Good debt is debt that you’ve handled well and paid as agreed.  The longer your history of good debt is, the better your score will become.
  7. Keep risk to a minimum.  Two of the biggest mistakes are, missing payments and suddenly paying less or more than you usually do.  Other changes that could scare your card issuer but not necessarily dent your credit score could be, taking out cash advances, or even using your cards as businesses that could indicate current or future money stress for example pawnshop or a divorce attorney.