CHFA SmartStep Program
CHFA SmartStep purchase mortgage program is open to home-buyers that have a mid credit score of 620 or higher. This program features CHFA’s lowest mortgage interest rate. It features FHA, VA, and USDA Rural Development. If you qualify, you may also pair CHFA SmartStep with CHFA’s down payment and closing cost assistance programs. You may also add a CHFA Statewide Mortgage Credit Certificate (CHFA MCC) for an annual tax credit. Continue reading
Do you have a minimum mid credit score of 680? It could be possible for you to purchase or refinance with a 30-year fixed rate mortgage with only 3 percent down and no mortgage insurance. On a traditional loan borrowers would need to contribute 20 percent down to avoid paying for costly mortgage insurance (MI). Continue reading
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?
- 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.
What is A My Community Mortgage?
Has a down payment been a stumbling block to advancing your goals of purchasing a home, Fannie Mae may have the loan program for you. The My Community program was created by Fannie Mae with the intent to provide low rates, minimal risk-based price adjustments, and reduced mortgage insurance costs to home buyer who meet certain requirements. Homebuyers can purchase a house under Fannie Mae’s My Community Mortgage product with a 3% down payment if at least one co-borrower is a first-time buyer.
Low Rates Risk Based Price Adjustments
The program has a no loan-level-price adjustments. These on a conventional loan could lead to the borrower paying more due to the higher risk associated for the lender, however this is not the case with the My Community Mortgage program. A few LLPAs to consider are the following:
- FICO score, the good news is whether you have a 620 or 800 score, those who get approved get the same interest rate pricing.
- Property type- Fannie Mae will increase the cost of loan if the property is labeled as higher risk. Properties that are commonly high risk are condominiums, duplexes, triplexes, or fourplexes.
- Down payment, on a conventional loan Fannie Maw will adjust pricing based on the size of your down payment. For example if you have the ability to pay a larger down payment then the outcome would result in better pricing. With the My Community Mortgage you have access to the same rate regardless of your down payment.
- Subordinate Financing or Second Mortgages, this program does not have any additional charges is there’s a second mortgage.
Affordable Mortgage Insurance
A positive attribute of this loan program is that is has reduced mortgage insurance costs. On a traditional loan the insurance cost is determined by many factors, “coverage” requirements is one of those factors. With a My Community Mortgage, the coverage requirement from the lender is noticeably less, making way for a cheaper mortgage insurance costs. Listed below is a table comparing coverage for a traditional loan vs a My Community Mortgage.
||Less than 5% down
|PMI Coverage Amount for a regular Conventional Loan
||12% PMI Coverage
||25% PMI Coverage
||30% PMI Coverage
||35% PMI Coverage
|PMI Coverage Amount for a My Community Mortgage
||6% PMI Coverage
||12% PMI Coverage
||16% PMI Coverage
||18% PMI Coverage
Reduced Down Payments
One of the biggest draws of this program is the down payment requirements. This programs allows Down Payment Assistance to assist in a down payment that can provide as little as zero down on a new property. Now that conventional 3% down loans are a reality, buyers have a real alternative to FHA. While the FHA loan has its benefits, it comes with high upfront fees and permanent mortgage insurance. Three percent down loans with the following characteristics will be considered for approval:
- The mortgage is a fixed rate loan.
- The property is one-unit single family home, co-op, PUD, or condo.
- At least one buyer has not owned a home in the last three years.
- The property will be the owner’s primary residence.
- The loan amount is at or below $417,000
For those wishing to use a first time homebuyer program, there are several options. Both FHA and the Fannie Mae My Community Mortgage are some of the best options available. If you wish to know more information or take action on determining your eligibility, we would love to help. Please feel free to email or contact us at (303) 444-5251.
What To Know Before Refinancing
Refinancing, is when a new mortgage replaces the original mortgage on a house. This is done when it benefits the borrower to lock in a different, and better interest term and rate. In order to do this the first loan is paid off and this allows for a second mortgage to be created. This could be great news for people with a nearly perfect credit history. By refinancing it is possible to convert a variable loan to a fixed rate and by doing so lock in lower interest rate. In many circumstances refinancing can work in favor of the borrower and lower mortgage payments. Having the right knowledge and being aware of the economic climate however is huge.
What is Refinancing
When refinancing you are applying for a new loan. In this process obtaining a new mortgage will aim to reduce monthly payments, lower you current interest rates, change to a different mortgage company, and or take cash out of your house for one reason or anther. Since the borrower in a refinance is applying for a new loan there are a few things to keep in mind:
- Your current credit score and payment history.
- Employment history.
- Your source of income and income.
- Your assets such as saving accounts and stocks.
- The current value of your house, otherwise known as an appraisal.
Benefits of Refinancing
- Lower mortgage rate.
- Lower monthly payments.
- Obtain money for a large purchase such as a car or a home remodel. This is possible by taking what is called equity out of the house. Equity is built up over time as the value of ownership increases in a home or property. This represents the current appraisal value of the house less any remaining mortgage payments.
- A more stable monthly payment. Commonly people chose to refinance from an adjustable-rate mortgage(ARM) to a fixed-rate mortgage in order to have a more stable and predictable monthly payment.
- Reset a current loan. If your ARM Loan is about to adjust. For example if you had originally entered into a 7/1 ARM and it’s been six years, refinancing could be an option.
- Consolidate two mortgages. Some people have two mortgages or a mortgage and a home equity line of credit (HELOC). For simplicity it may make since for the borrower to refinance both mortgages into one.
Points to Consider Before Refinancing
There are loan fees to be aware of before refinancing. To counteract or avoid entirely these fees, it is best to shop around or wait for low fee or no-cost refinance. Contact the Colorado Mortgage Group for current mortgage rates and helpful tips and one-on-one counseling to move forward with a refinance.
Increasing Your Credit Score
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.
- 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.
- 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.
- 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.
- Pay off debt rather than moving it around.
- 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.
- 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.
- 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.
Buying a Flipped Property – What to Know
If the home you are buying is being flipped within 90 to 180 days since it was purchased and has experienced an increase in value there are some things you need to know.
Rules for Recently Flipped Properties
- An additional appraisal is required (at no cost to the borrower whatsoever) and must include an interior inspection of the property
- When the borrower is purchasing a property that was purchased by the seller less than 6 months before the borrower signs the purchase contract, or
- When there is a value increase (as represented by the new sales price) of 10% or more if the seller bought the home within the past 90 days, or
- When there is a value increase (as represented by the new sales price) of 20% or more if the seller bought the home within the past 91-180 days
- Exemptions for this rule specifically:
- If the property is in a rural area
- When purchasing from a local, State or Federal Government Agency
- When the seller acquired the title to the property through foreclosure, deed-in-lieu of foreclosure
- When purchasing from a non-profit entity that as part of a local, State or Federal Government program
- When the seller acquired the property through inheritance, or through a dissolution of marriage
- When purchasing from an employer or relocation agency in connection with the relocation of an employee
- When purchasing from a service member who received a deployment or permanent change of station order
- Located in an area that was designated by the President as a federally declared disaster area based on certain parameters
- Loans for initial construction of a dwelling
- Temporary Bridge Loans (for 12 months or less)
- Loans secured by a new manufactured home
I wanted you to be aware of some of the additional requirements because it may take longer to process the loans due to the possibility of a 2nd appraisal.
How do I know if it’s a Condo?
Because of the changes to the condominium approval/review processes it is absolutely imperative that you understand what type of property you are dealing with BEFORE you move forward with listing, selling, or buying a property in Colorado. Condominiums present financing challenges better addressed at the beginning of the transaction, as opposed to later. For example: There’s no point writing up an offer at midnight for a buyer when this project isn’t on an approved list and the project wouldn’t qualify even if it was submitted for review.
Condominium definition in Colorado: A form of ownership where units are owned by individuals but the land and common areas are owned jointly with all owners.
So what should you do?
1. Do not accept MLS information or verbal information. Get a copy of the legal description.
Blindly accepting what you read on the MLS listing or what the current owner says isn’t smart. Very agents and buyers should actually READ the legal description.
2. Do NOT rely on the project name for determination.
Many projects have misleading names. The developer names the project “Shady Pines Townhomes” so people assume that because the word “Condominium” isn’t mentioned that it’s not a condo and doesn’t require project approval.
3. READ the legal description – Does the legal description of the unit include the lot?
If not you probably have a condominium form of ownership. Check the project documents.
4. Contact a Trusted Lender – An experienced lender will know what to do right away to determine if the home is a condominium.
NOTE: There is a special exemption from project approval for “Site Condominiums” defined as detached units with no attached/shared garages etc. Site Condos are typical for only a few states.