Boulder CO Homes for Sale

Some mortgage sources are direct lenders such as banks and mortgage retail establishments. Going directly to the bank or source was probably the way that your parents obtained their home loan, but the trend is away from such direct establishments towards the brokerage or "multi-lender platform"

Brokers represent a number of lenders and offer these lender's products through a wholesale arrangement. The lender will then compensate the broker when they deliver a loan to them. Many banks that offer retail or wholesale loans will allow the broker to charge up to 1% of the loan amount for their compensation.

Direct lenders are captive to their own product. They will not provide unbiased advice nor selection, since by doing so they will possibly risk losing your loan to the company whose product truly provides you the most value. Brokers on the other hand can sell a variety of products, and can be objective in their recommendations.

If you walk into your local bank they'll usually take your application there, perhaps underwrite your loan there, and lend their own money. If your loan is declined for whatever reason, you will need to begin the process again with another source. With a multi lender source, you have another chance if one lender doesn't approve your loan.

You apply for a loan on a standardized form known as the "1003". The lender will want to verify certain information about the borrower(s) and will require additional information on the property. Borrower information will include verification of income and employment, assets, and credit history. Some of this information will be provided by you (W-2 forms for 2 years, pay stubs, and bank statements). Other information, such as your credit history, will be obtained directly from the credit bureaus.

For the property itself, the lender will order an appraisal and a legal description of the property, such as a title report.

During the "processing" and/or "underwriting" period, your credit, assets, and income are checked and compiled. At the end, your loan is either approved with or without conditions or it is declined.

Conditions are further documentation or checks that the lender needs to finalize your loan before funds can be dispersed. Many borrowers become frustrated by conditions that surface at the end of a loan transaction and can't understand why they are being raised so late. This is because the loan can go through several review processes prior to actual funding. Since most loans these days are sold and serviced by other parties, the lender must verify that the loan will be salable upon close.

Do not make any adverse changes to your financial "picture" during this delicate time between approval and when funds are dispersed.

Getting preapproved for a loan is critical in today's real estate environment. By going through the loan process prior to being under contract on a home, your real loan closing will be quick and subject only to a satisfactory appraisal and title report on the home.

Complete your application for the maximum loan amount and purchase price that you're interested in. You can always reduce these later.

To begin the process or try and prequalify yourself visit Quicken's site:

Qualify ME

These loans are used by self-employed borrowers who have difficulty verifying all of their income, or by borrowers with very complex income structures.

With a no income documentation loan, the borrower can simply state his income on the application, and the lender will use this stated income to qualify the loan.

Why? With a higher cash down payment, typically 25 % along with good credit, these loans allow borrowers to buy into prices a lender might not ordinarily loan them.

Loan to value, or LTV, is the ratio of loan Amount to the Value of a property. When a property is purchased, the down payment is critical to the lender decision. When the down payment is less than 20% a lender will generally require mortgage insurance. Mortgage insurance coverage, or PMI, is a premium or fee which is included in the monthly mortgage payment. It can range from .22% to almost 1% of the loan amount annually, with the exact coverage determined by the loan type, insurance company and LTV. Mortgage insurance payments are not tax deductible. Overall, the lower the ratio of the loan amount to the value appraised, the more favorably a lender views the risk of the loan. Loan to value considerations also differ in owner occupancy versus rental or non-owner situations.

AVOID MORTGAGE INSURANCE WITH 80/10/10

If you purchase your home with less than 20% down, chances are you will obtain a loan that is insured by "Mortgage Insurance" (MI). This protects a lender in case of default on a loan. This type of insurance is generally required when a borrower has less than 20% equity in a home.

One way to avoid MI is to purchase a home with a combination first and second mortgage. The first mortgage would be limited to 80% of the home's appraised value. The second mortgage, which would close in conjunction with the first, would then provide for the difference between the home's purchase price, less the 80% first mortgage, less the down payment available. This is commonly referred to as an 80-10-10.

I ENCOURGAGE YOU TO CONSULT WITH A MORTGAGE BROKER AND FIND THE BEST LOAN PACKAGE FOR YOU! E-MAIL ME FOR A REFERRAL!

A lock is an agreement between the borrower and the lender and specifies a number of days for which a loan's interest rate and points will be guaranteed by the lender. Should interest rates rise the lender is obligated to honor the rate. Should interest rates decrease, the lock must still be honored by the borrower.

Locking a rate protects you from the time that your lock is confirmed to the day that your lock period expires.

Points are up-front mortgage interest fees paid on a loan to reduce the initial interest rate. For example, a one point loan will always have a lower interest rate than a zero point loan. Therefore, paying points is a trade off between paying money now versus paying money later.

Generally, you should only pay points if you plan on keeping the loan for at least four years. Points are prepaid interest, you need to be sure you will keep the loan long enough to recoup the costs.

If you are purchasing a home, points are generally entirely deductible in the year you buy. In a refinance transaction, points must be amortized over the life of the loan. Consult your tax advisor for more information

To check out more mortgage information, the following sites have been rated among the best:

HUD information

FannieMae

The Mortgage Insurance Companies of America (MICA) the trade association representing the private mortgage insurance industry, is offering consumers a free online Private Mortage Insurance Cancellation Kit. The downloadable kit is posted on the MICA consumer Web site at

PMI Cancellation

It will help borrowers determine if they are eligible to cancel the private mortgage insurance generally carried on conventional home mortgage loans with down payments under 20%. The kit contains a step-by-step Guide to Private MI Cancellation, Frequently Asked Questions about Private MI cancellation, sample letters consumers can use in communicating with their loan servicer, background on the Homeowners Protection Act and a glossary containing definitions of industry terminology.

Here are some of the most popular reasons to refinance:
-Lower your monthly mortgage payment to improve cash flow
-Switch from an Adjustable Rate Mortgage(ARM) to a fixed rate loan
-Switch from a fixed rate loan to an ARM
-Free up tax-deductible cash
-Eliminate Mortgage Insurance(MI)

Any loan where the lender pays all of your closing costs (like title & escrow fees, appraisal, lender's fees, etc.) is commonly referred to as a "no-cost" loan. With a true "no-closing cost" loan, you can refinance for any incremental drop in your interest rate since the transaction costs are zero. Even in a declining rate market, where you believe rates may continue to fall, a no-cost loan will make sense. Should rates continue to decrease you will have invested nothing in loan costs, and can simply refinance at anytime. No cost loans will carry a slightly higher rate than a loan that does not pay your costs. In general, a no cost loan is the better strategy if you plan to keep your loan for the next two and a half to three years. Longer than that, you should consider paying the costs to get a lower rate. Over time, the lower rate will save you more money. If you plan to keep the loan for four to five years, it often makes sense to pay points to get an even lower rate.

The analysis here is simple. Ask your mortgage source what the costs involved are (all costs, not just the lender's fees). Verify this by asking what loan amount the new payment is based on. Then take the cost of the refinance and divide by your monthly savings to determine the "break even" point in time. As long as you plan to keep that loan for sometime longer than the break-even point, it's advantageous to refinance. Even with a loan that includes costs, at times it may make sense to lower your payment by wrapping the costs into the new loan balance. Just be aware that the costs are increasing your principal balance owed and still do the analysis above.

Has your adjustable moved up on you in the last few years? Don't feel like starting with another low rate and watching it move up all over again? Consider refinancing into the security of a fixed rate loan. Toady's market offers numerous choices for loans that are fixed for a shorter time than the traditional 30 or 15 years. Loans are available with fixed rates for 3, 5, 7, and 10 years and the shorter the initial fixed period, the lower the interest rate. All of these loans are amortized over 30 years so there's no need to worry about the payment being too high. All you need to do is match up how long you expect to keep the loan with the closest fixed term. At the end of the fixed term, these loans automatically convert into ARMS with adjustments annually, so there is no balloon payment. Often the current fixed rates will be somewhat above the rate on your current ARM, unless you are several years into your adjustable. You will need to decide if the security and insurance against further rate increases is worth the additional payment that you might incur.

If you've recently decided to start looking for a new home, or will be relocating within the next few years, it may make sense to evaluate your current loan. By switching from a 30 year fixed to a low rate adjustable or short term fixed, you can save substancially over the remaining time that you'll be in your home. In this type of situation it almost never makes sense to pay closing costs, so shop for a no cost loan with a slightly higher rate. Also, don't take a loan with a prepayment penalty, unless the prepayment is waived upon sale of the home.

The Primary advantage of homke mortgage loans is that the interest costs are deductible for tax purposes. If you are currently paying a higher rate of interest on credit cards, car loans, or other forms of debt that are not deductible, it may make sense to pull the cash out of your home and use it to pay off those debts. Lenders will typically allow you to borrow up to 75% of the appraised value of your home in a cash out refinance.

If you purchased your home with less than 20% down, chances are you have a loan that is insured by "Mortgage Insurance"(MI). Most borrowers are aware that they are paying MI on a monthly basis, but you can check your mortgage statement if you're not sure. As your home appreciates or your loan balance decreases(or a combination of the two), your equity in the home will exceed 20%. At that time a favored method of eliminating the MI tied to the loan is to refinance. The savings of eliminating the MI alone will often warrant refinancing. Be aware that mortgage lenders value your property at what comparable homes have sold for in the last six months, not what they are currently listed for. If you are close to the 20% mark, ask your realtor or mortgage source to provide you with a "comp search" estimate which will give you an idea of how your lender views your home's value. If you are currently in a low rate fixed mortgage, don't refinance simply to remove MI. Instead, work with the existing mortgage holder so that you can keep that low rate and still reduce your payment by removing the MI premium.

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