Mortgages: Refinance and Purchase
When purchasing or refinancing a home in Colorado it is important to know what terms you bring to the table to qualify and get the best interest rates and closing costs for your loan. At present as of (January 2011) the best terms for a purchase or refinance transaction for a “conforming loan” (that is a Fannie Mae or Freddie Mac based loan) would be the following: Credit scores over 740, a loan to value of 80% or less, low debt to income ratios, and a home that is a single family primary residence.
Aside from those ideal terms; even if your credit scores are under 740, your debt ratios are higher than you would like them to be, and your home is not a single family residence does not mean you can’t get the best loan terms. It simply means you have other factors playing a role in the pricing of your loan based on the underwriting guidelines set forth by Fannie Mae and Freddie Mac. (See our FAQ section for more answers and information)
Colorado Purchases: Interest rates and loan terms for purchase money transactions in the state of Colorado are based on the following:
- The type of home to be purchased (Single Family, 2-4 family, Townhome, Condominium)
- Residency: Primary residence, Second home, Investment home (to be rented full time or part time)
- The loan to value: This is based on the down payment anywhere from 5%, 10%, 15%, 20% or more.
- Credit scores for the applicant(s)
- Debt to income ratios
Colorado Refinance: Interest Rates and loan terms for mortgage refinance transactions in the state of Colorado are based on the following:
- The type of home to be refinanced (Single Family, 2-4 family, Townhome, Condominium)
- Residency: Primary residence, Second home, Investment home (to be rented full time or part time)
- The loan to value: This calculation is based on the amount of money you wish to finance divided into the homes appraised value: For a “Cash Out” Refinance you may borrow up to 80% of your home’s value. For a “Non Cash Out” Refinance also called a “Rate/Term” Refinance you can refinance up to 90% of your homes value however you are subject to PMI when you refinance above 80% of your Loan to Value.
- Credit scores for the applicant(s): Credit scores may be as low as 680 when refinancing with a loan to value that exceeds 80% (80 – 90% LTV) and as low as 620 when refinancing at 80% or less.
- Debt to Income ratios: These will vary based on the strength of the borrower. These calculations can sometimes be offset by other factors such as: significant asset reserves and or savings.
With all of that said, this is one of the reasons we advise prospective clients to call or email us for interest rate information. There are so many dynamics an individual brings to the table that impact the loan rates and closing costs This is the best way to provide “real time” loan scenario and provide you with “real world” interest rates and closing costs.
(The following terms outlined above are simply guidelines and are subject to change. They are primarily listed for informational purposes only.)
