Purchasing a home in Colorado is easier than ever with a multitude of First time Homebuyer Programs and Downpayment assistance. Athena Mortgage Group has the experience and knowledge you need to help you get into that perfect home. All it takes is about 20 minutes of your time for a simple phone call or online application.
buying a new home
A Step-By-Step Guide To Buying A Home in Colorado
- 01
The painless process begins with a one on one meeting, either over the phone or in person, to get as much information about you as possible. You can also fill out an online application if that is more convenient with your schedule. We will discuss credit, income, down payment funds and loan options. By the end of this meeting, we will have a clear plan of action leading to the final goal of home ownership. Book a consultation to get more of your questions answered.
- 02
If credit issues become evident, we will take the time to review each account and the steps that need to be taken to improve your credit rating or dispute incorrectly reported information. Book a consultation to get more of your questions answered.
- 03
Once the loan application interview is complete and the credit report has been acquired, all supporting documents need to be submitted. Below is a general list of what will be needed. Each applicant is different, so additional documents could be needed. This is just a starting point.
-1 month of most recent pay stubs
-2 months of most current bank statements. All pages for all accounts, including 401K retirement funds, IRA funds, etc…
-2 most recent years W-2s
-If Self-employed, 2 years most recent tax returns
-If recently divorced, Divorce Decree
-If filed Bankruptcy in the last 7 years, we need all pages of the BK papers.
-If there has been a foreclosure or short sale in the last 7 years, please provide all papers related to the transfer of property.
-If receiving a monetary gift for down payment funds, a gift letter and proof of ability to give, from the donor, is required.
Book a consultation to get more of your questions answered.
- 04
Once the loan application is complete and the supporting documents are received, the loan gets processed for title insurance, homeowner’s insurance, employment verifications, etc… and is then submitted to the lender for underwriting. Typical turn around times are 24 hours in setup and 48 hours in underwriting. However, if any critical documents are missing, this could delay the process. Book a consultation to get more of your questions answered.
- 05
The loan passes through loan setup and then compliance with most lenders before it goes in line to be put in front of an underwriter. Typically, this will take 24-48 hours. Then it will sit in line for an underwriter for another 24-48 hours. Once the underwriter has reviewed the complete loan package, he/she will either, deny the loan, suspend the loan or provide a list of additional documents that are needed to complete the underwriting decision.
Denial: The lender does not feel the loan fits into the guidelines for purchase.
Suspension: There is a critical document missing that must be obtained before the underwriter will make a decision. This is not an approval or a denial.
Approval: The underwriter feels that the loan meets all guidelines to purchase the loan, pending the additional list of documents is provided.
Once the underwriter has issued the additional documents list, we will contact you, the borrower, to provide the missing papers. The sooner these documents are received, the sooner they will go back to the underwriter for review.
Book a consultation to get more of your questions answered.
- 06
While the loan is in line for underwriting, you will be working with your Realtor to complete the home inspections. We do not order the appraisal until the home inspection is complete and all Home Inspection conditions and Resolutions have been finalized. Once that is complete, the appraisal is ordered. The fee for the appraisal is paid up front and can cost between $650 and $1250. It depends on the type of loan and property being appraised. Book a consultation to get more of your questions answered.
- 07
The underwriter will review the documents, including the appraisal and if everything has been provided and cleared. The lender will issue a “Clear to Close”. We are then able to order documents and figures to be sent to the title company for the final Closing Disclosure. Once you receive the first, initial Closing Disclosure, it starts the clock ticking and 3 business days later, you can close.
Our goal is to provide the loan closing figures as soon as the appraisal is complete so that you will have time to review the final Closing Disclosure and Closing Documents at least 3 business days prior to closing. This will allow you time to read through all the closing paperwork and order your funds to close.
Book a consultation to get more of your questions answered.
- 08
We pride ourselves on attending each and every closing and are available to answer any questions or issues that might arise. Be sure to bring a legal form of identification, and if funds are required to close, they will need to be in the form of a cashier’s check or a wire.
Book a consultation to get more of your questions answered.
What closing costs should I be prepared to pay?
- 01
Mortgage insurance is required on a conventional loan if the loan to value is 80% or higher. It protects the lender and the consumer in the case of default. It covers the loan balance if the loan goes into foreclosure and the sale of the home does not cover the loan balance.
If the loan is an FHA loan, there will be mortgage insurance regardless of the loan to value. A VA loan will have a funding fee instead of mortgage insurance and a conventional loan will only have mortgage insurance if there is less than 20% of a downpayment. To understand more about mortgage insurance for your particular loan, please click the tab for your designated loan type.
Book a consultation to get more of your questions answered.
- 02
The underwriting fee is charged by almost all lenders to underwrite a loan. It should not change from the initial loan estimate to the time of the final closing disclosure and can range from $595-$1595.
Book a consultation to get more of your questions answered.
- 03
An appraisal is required on most purchase transactions. This fee is collected in the beginning of the process after the home inspection is completed and all issues are resolved. This can cost from $650 – $1250, depending on the type of loan. Once in a while a property inspection waiver can be obtained if there is more than 20% downpayment. Book a consultation to get more of your questions answered.
- 04
The credit report is pulled in the beginning of the transaction, once authorization has been given to move forward with the loan. Most banks and lenders will collect this fee at the end of the transaction at closing. This fee can range from $35 – $200. Depending on what is needed throughout the loan process in the way of credit supplements and updates. Book a consultation to get more of your questions answered.
- 05
This allows the lender to hire an outside source to make sure all taxes have been paid on the property and there are no tax liens against the property at the time of closing. This fee is $50-$100. Book a consultation to get more of your questions answered.
- 06
The lender will always need to make sure the property does not fall into a flood zone and will not require flood insurance. This third party fee is $8-$18. Book a consultation to get more of your questions answered.
- 07
This is a fee paid to a third party to process the loan. It is a fixed fee and should not change from the initial loan estimate to the closing disclosure and can range from $300-$995. Book a consultation to get more of your questions answered.
- 08
Title companies are used for the title search and closing in the state of Colorado. Attorneys are not needed for standard transactions in the state of Colorado. Fees can vary quite extensively from title company to title company. However, when you are purchasing a home in Colorado, the Owner’s policy is paid by the seller if the seller chooses the title company. It will often show as a fee and then a credit to the buyer at closing. Lender’s coverage and all fees associated with it are charged to the buyer. You should always ask for those fees from the agent up front to be prepared for them when you receive the closing disclosure. Book a consultation to get more of your questions answered.
- 09
FHA, VA and Conventional loans with more than 80% loan to value are required to set up and escrow account with the lender. This is when the lender collects enough hazard insurance and taxes to be able to pay the full year of hazard insurance up front and several months of taxes to be paid when they come due the following year. The seller will have to give a credit back to the buyer for the time they have lived in the home from January 1 – closing date. Be sure to ask your loan officer for more information about how much will be collected to match your loan closing date. Book a consultation to get more of your questions answered.
- 10
Interest is collected from closing date to the end of the month. This is a per diem (per day) calculated based upon interest rate and loan amount. Book a consultation to get more of your questions answered.
- 11
Some other closing costs you might see on your Closing Disclosure at closing could be:
HOA Transfer Fee
HOA reserves or 2-3 months of HOA dues at closing
VOE Fee: Verification of Employment fees
Funding or Warehouse line fees
Whatever the fees are in the beginning of the loan, from when you receive the loan estimate, they should not change substantially to the time of closing, except to decrease, or if there was a loan product change due to new information that has arisen in the loan process.
Make sure you compare your Initial Loan Estimate with your final Closing Disclosure and if there are any major discrepencies, ask your loan officer to explain the change in detail.
Book a consultation to get more of your questions answered.
first time homebuyer programs in colorado
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There are many first time homebuyer programs available within the state of Colorado. Before we go into this, we must define who is considered a first-time homebuyer. For a conventional loan, it is a person who does not currently own any other property and has not owned any property in the last three years. There are special circumstances that will allow a person to buy on a first time homebuyer program after owning within the last three years. A good example is someone coming out of a divorce and purchasing a home for the first time since the divorce has been finalized. Book a consultation to get more of your questions answered.
- 02
There are many good downpayment assistance programs in Colorado and they all have their pros and cons. We primarily have two programs we use at Athena Mortgage Group. The other programs are area specific, so we only consider them if the first time homebuyer is considering purchasing a home in that particular designated area. Book a consultation to get more of your questions answered.
- 03
This program has been around for as long as I have been doing loans and has changed tremendously over the years. It is a fantastic program because it has been perfected to be tailored to the homebuyer’s specific needs and qualifications. The various programs all have different guidelines and requirements based upon credit score and income. The minimum score required is a 620, except for Preferred and Preferred Plus, which require a 680 credit score.
The way it works is CHFA will provide the financing for a first mortgage and then provide grant funds or a zero-percent second mortgage loan funds for up to 5% of the first loan amount to be used towards downpayment or closing costs. In addition, If additional closing costs are needed, CHFA’s optional Borrower Premium program gives the lender a credit in the amount of 1 percent of the first mortgage loan amount. The lender will apply this credit towards the closing costs on the CHFA first mortgage, reducing the amount of money that is required to bring to the closing table. A higher interest rate will apply.
Pros:
Maximum income limits are higher than most other DPA programs offered in Colorado
Minimum investment required is $1000 and can be in the form of a gift.
CHFA Smartstep Plus, Preferred Plus, and HomeOpener Plus can be in the form of a grant that does not have to be paid back upon sale or refinance of the property at a later date.
Lender paid Mortgage insurance is an option on select programs. This will often lower the monthly payment overall.
Cons:
Higher interest rates then traditional FHA or conventional financing.
Income limits could eliminate some First Time Homebuyers from the program.
As with most down payment assistance programs, CHFA does have income limits based upon number of people in household and location of the property. Check the income limits for the area you are wanting to purchase by clicking here.
CHFA also requires all borrowers to take a First Time Homebuyer Education class before closing on the new home. They offer free in person classes all over the state and many times throughout the month. Online education is also available for $99.
Book a consultation to get more of your questions answered.
- 04
Colorado Housing Assistance Corporation is a simplified version of CHFA. There is a minimum contribution of $1000, and it CANNOT be a gift. But, it is a silent second lien mortgage that is recorded against the property and must be repaid if the home is ever sold or the first mortgage is refinanced.
The requirements for this program are much harder to meet due to the low income limits and the high home prices in Denver. For example, for a household of 4, the maximum income limit outside Arvada, is $64,100. With higher home prices in the Denver metro area, it makes it very difficult to qualify a borrower under this program.
Repayment is based upon the location of the property and best option available to the homebuyer at the time of loan acquisition.
First time Homebuyers are also required to take a CHFA or CHAC approved live or online course.
Cons:
It is a second mortgage lien that must be paid off, eventually.
Income limits are extremely low.
First time homebuyer education requirement cannot be met with online education.
$1000 required downpayment funds cannot be in the form of a gift.
Cannot use CHAC funds if the property is already tenant occupied. Meaning, if the homebuyer currently rents the home, he/she cannot acquire CHAC downpayment funds.
Pro:
Homebuyer that has utilized CHFA DPA assistance in the past. CHFA only allows a homebuyer to use CHFA funds one time. CHAC provides a good alternative to CHFA.
Book a consultation to get more of your questions answered.
- 05
There are several other programs worth taking a look at, but are not listed in detail because they are more city and/or county specific. Each program has its own guidelines, limits and qualifications. If one is of interest, please contact us with your questions and we would be happy to get more details to find out if it is a good fit for your specific needs. Here is the list of other programs to consider when shopping downpayment assistance in Colorado.
Aurora Home Ownership Assistance Program or Aurora HOAP: This program follows CHAC guidelines. Again has strict income limits.
Douglas County Housing Partnership: Again, very similar to CHAC guidelines with income limits. Purchase price cannot exceed $300,000.
Larimer Home Ownership Program or LHOP: Requires 1% of borrower’s own funds into the purchase.
Summit Combined Housing Authority or SCHA: It is a silent second mortgage recorded against the property at 2% interest rate.
There are many other programs available that have not been listed here. Each and every one of them has Pros and Cons, so it is critical that you contact us or do the research to find out which program best fits your needs.
Book a consultation to get more of your questions answered.