Mortgage Rates Colorado: How To Find The Best Rates
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Since home loans are a long-term commitment, one of the most important things to do before buying a new home in Colorado is to check for mortgage rates, home values, and the APR. By checking these figures, you’ll get a good picture of how much you’ll actually be paying for your home.
Whether you’re looking for a home in Denver, Boulder, or anywhere else in the state, we’re here for you. In this guide, we’ll give you insider access to the most current mortgage rates in Colorado!
Mortgage Loan Options In Colorado
If you’re buying homes in the United States, you’ll encounter several different loan options with their own features, rates, pros, and cons. In this section, we break down the major loan products available to American homebuyers.
Conventional home loans are mortgages from banks, credit unions, and other mortgage companies. These mortgages are typically subject to limits set by the Federal Housing Finance Agency (FHFA).
However, you can get a jumbo mortgage that exceeds those limits if you’re looking to buy a larger home. As a trade-off, jumbo loans have a higher rate, APR, and credit score requirement compared to their conforming counterparts.
As its name implies, fixed-rate mortgages have a static interest rate and APR. Regardless of fluctuations in the market, you’ll be paying the same amount of money each month. These loan products are available in 15-year, 20-year, and 30-year fixed-rate terms.
Adjustable-rate mortgages (ARMs) have mortgage interest rates & APR that fluctuate with the market. Typically, these rates adjust every year according to the performance of an index chosen by the lender.
The terms on an ARM are defined in its name. For example, a 5/1 ARM gives the borrower a fixed interest rate & APR for the first five years, after which they will adjust annually.
Several agencies in the United States government offer mortgage loans to boost the homeownership rate in certain demographics. The three major government-backed mortgages are:
Federal Housing Administration (FHA) loan: FHA loans are geared toward people on the lower end of the income scale with more lenient credit score and down payment requirements. However, this loan comes with mandatory private mortgage insurance (PMI).
U.S. Department of Agriculture (USDA) loan: These loans are designed to stimulate housing growth in eligible rural locations. USDA loans feature no down payment and have lower PMI premiums.
Department of Veterans Affairs (VA) loan: VA loans are exclusively available to active or retired military members and their families. They feature no down payments and no PMI requirements, but you do need to pay a funding fee at closing.
Different from home purchase loans, a refinance is usually taken on an existing home. There are two major types of refinance loans:
Rate and term refinance: This type of refinancing allows you to change the length or loan type of an existing mortgage. For example, you can shorten a 30-year fixed-rate loan into a 15-year one to pay it off faster. You can also change an ARM into a fixed-rate loan to avoid ARM rate & APR fluctuations.
Cash-out refinance: As you pay off your mortgage, you build equity on your home. One way to leverage this home equity is to take a cash-out refinance. By taking out a loan larger than your current mortgage balance, you can use the leftover money for other purposes.
Current Mortgage Rates In Colorado
If you’re looking to buy your dream home in the state, you should know the rates and APR. In this table, we give you insider access to the most recent mortgage and refinance rates in Colorado.
The rate & APR details on this table are collected from America's major lenders. We update this table daily!
Today’s Mortgage Rates
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Keep in mind that these mortgage & refinance rates may vary depending on your credit score.
We have a mortgage rate & APR tool at the top of this page. Just enter your basic details, and we’ll provide a custom Colorado mortgage rate estimate just for you!
Colorado’s First-Time Homebuyer Programs
Most states offer first-time homebuyers extra benefits to help them buy their first house – the state of Colorado is no exception.
The Colorado Housing Finance Authority (CHFA) is the main body providing first-time homebuyer loan programs in the state. To qualify for these state-run loan programs, the borrower should:
Have a household income falls under CHFA-set limits
Complete the CHFA homebuyer education course
Have a minimum credit rating of 620
Have a minimum of $1000 for the down payment
Qualify for a loan at a CHFA-partnered lender
CHFA Home Purchase Loan
The state offers an assisted mortgage available through CHFA partner lenders. These mortgages feature affordable interest rates, low PMI, as well as support for closing costs and fees. Borrowers are also required to complete a free homeowner education course.
CHFA Down Payment Assistance Grants
Another option for first-time Colorado homebuyers is the CHFA down payments assistance program. If you qualify, you can receive up to 3% of your CHFA loan amount as a grant. This means you’ll get 3% of your home value for free without needing to pay it back!
Steps To Buy Real Estate In Colorado
Not all borrowers know how to buy real estate. To help you understand the process better, here are the first steps you need to take to get your brand-new Colorado home.
Get A Preapproval Letter
Before looking at real estate properties for sale, you need a pre-approval letter. You can get this by applying for a loan from a lender. To get the best Colorado mortgage rates, we recommend comparing between three or four lenders.
Here are four key reasons why your home buying journey should begin with a pre-approval:
A preapproval letter gives you a rough idea of your price range and how much down payment you’ll need to save up for.
Pre-approval shows sellers that you’re serious about buying the home.
Going through the process can help you find the right loan product for your needs.
Pre-approval gives you a rough idea of your rate.
Look For Homes Within Your Price Range
Now that you’re pre-approved, it’s time to look for your Colorado home.
It’s wise not to exceed the price range given to you by your lender. If your property value is too close to your maximum budget, you can get saddled with expensive mortgage payments.
Plus, closing cost and lender fees usually add 2 to 5% of the home value – the higher the property purchase price, the more you’ll have to shell out. Make sure to also include PMI fees into account if you can’t afford a 20% down.
Make An Offer And Prepare For Closing
Once you’ve decided on a property, make the offer! Due to the limited inventory of Colorado homes, you may experience stiff competition from other buyers. To boost your chances of success, make a competitive offer to sellers.
When the seller agrees to your offer, you’ll be given a contract to sign. Afterward, you need to inform your lender to prepare the necessary documents and lock your rate & APR. Once the documents are prepared, you can finally schedule your closing date!
How To Get Better Mortgage Rates
Since mortgages are a long-term commitment, it pays to find the lowest loan rates possible. To help you get an affordable home loan, here’s some advice on lowering your rates.
Consider Paying Discount Points
Many lenders offer discount points to their borrowers. Usually, one discount point is valued at 1% of the loan amount and reduces your interest rate by 0.25%. For instance, if you have a $200,000 loan with a 4.25% interest rate, two points will cost $4,000 and drive your rate down to 3.75%.
Paying for discount points is a balancing act. Buying points to lower your rates means you’re shelling out several thousand dollars upfront for a small boost to your monthly savings, so make sure to calculate if this investment will pay off first.
There are cases where lower rates from points aren’t worth the trade-off. Usually, a longer-term loan will benefit more from discount points because you’ll save more from the rate reduction over the life of the mortgage.
Pay A Larger Down Payment
If you want to avoid mortgage insurance, you need to make a minimum down payment of 20% on a conventional loan. The minimum down on a conventional loan is 20%. But some lenders allow you to pay as little as 3% if you pay PMI fees.
Paying more down can benefit you in the long run because it reduces your balance – this translates into a lower monthly cost, rate, and APR. However, like discount points, this is something you need to calculate carefully. A lower monthly cost doesn’t mean anything if you end up breaking the bank trying to make your down payment.
Compare Offers From Multiple Lenders
Comparison shopping can help you save on your mortgage loan. Since lenders are competing for your business, they’ll try to entice you with lower rates or closing cost discounts.
When you apply for a mortgage, the lender is required to provide you with a loan estimate document. This estimate contains complete details about your rate, APR, and closing costs/lender fees. Because these documents are standardized across the industry, it’s easy to compare offers between lenders when you have a quote.
There are many mortgage options to finance your dream Colorado home. Whichever mortgage you choose, you should remember that the Colorado housing market is competitive – be sure to make good offers and follow our tips to get better Colorado mortgage rates.
If you’re looking for a mortgage to buy a home in Colorado, Wesley LLC is here for you! Our team is more than ready to help you find the home loan that best suits your needs. Contact us today for more information!