What exactly is a Colorado conventional home loan? Put simply, a conventional home loan is any mortgage loan not backed by the government. Government guaranteed loans, such as VA or FHA loans, fall under a separate umbrella. If you are interested in a Colorado conventional home loan, you have come to the right place. At Banner Mortgage, we help thousands of homeowners secure conventional and government backed loans each and every year. If you are not sure that a conventional loan is right for you, we encourage you to learn a bit more about the lending options available to homeowners in Colorado.
Types of Colorado Conventional Home Loans
Fixed Rate Home Loans
A fixed rate mortgage is the most common type of conventional home loan. These loans are typically issued with 10, 15, 20 or 30 year terms. As the name suggests, the interest rate on these mortgages remains fixed throughout the life of the loan. These loans are appealing to those who plan to live in their home for many years.
Adjustable Rate Loans
Also known as an ARM, conventional adjustable rate mortgages offer another option for potential homebuyers. The initial 3, 5, 7 or 10 year term of these loans typically comes with a very low interest rate, at the end of the term the interest rate is adjusted based upon the market. ARM loans are particularly appealing to those who plan to refinance or sell their home before the end of the fixed term.
Maximum Loan Amount – Colorado
The maximum loan amount for a conventional loan is based upon the local market. The national average is $417,000; loans that exceed this amount are typically considered jumbo loans. However conventional maximum loan amounts can go as high as $729,750 in certain areas. Here in Colorado, there are areas of the state that are considered ‘high cost;’ meaning homeowners can secure conventional loans in excess of $417,000. Contact us today to determine if your area is categorized as ‘high cost.’
Applying for a Colorado Conventional Home Loan
If you are ready to begin the application process for a conventional home loan in Colorado, we encourage you to review your current financial situation. You may be able to take steps to improve your credit and qualify for a lower interest rate.
Credit History & FICO Score
Take a look at your current FICO score and your credit history. What is your rating? If your score is between 700 and 720, you are eligible for lower interest rates. If your score is 750 or higher, you qualify for the most competitive rates on the market. As you review your credit score, you may find that blemishes on your record are negatively impacting your rating. This is an opportunity to reach out to the creditors who have reported you to the credit bureau and work to resolve outstanding issues. With some due diligence on your part, you can improve your credit score and ultimately save thousands in interest payments.
Debt to Income Ratio
Your debt to income ratio is one of the determining factors when a lender is considering you for a loan. What debt do you currently carry? Take a look at all student loans, credit debt, car loans and any other outstanding debt you hold. If your debt accounts for a large percentage of your current income, call me to discuss which debts to pay down or payoff . Have questions? We have answers! Allow us to help you assess your debt to income ratio.
In order to secure a Colorado conventional home loan, you should be prepared to make a down payment on your new property. Depending on your situation, you will be responsible for making a down payment between 3% and 20% (some restrictions apply for a 3% down payment). If you are not quite ready to make a down payment, now is the time to begin saving!
Are you ready to secure a Colorado conventional home loan? Contact us today! Allow us to guide you through every step of the process.