Financing Your Home Purchase
Financing is often one of the least familiar parts of buying a home, especially if you’re purchasing for the first time or it’s been a while since your last transaction. Understanding the basics can help you feel more confident and prepared throughout the process.
Getting Connected with a Lender
A lender is the bank, credit union, or mortgage company that provides the financing needed to purchase your home. Your loan officer will guide you through the process, from determining your budget to preparing your loan for closing.
We work with several trusted local lenders and are happy to help connect you with someone who may be a good fit for your needs.
Getting Pre-Approved
Pre-approval means your lender has reviewed your income, assets, debts, and credit to determine how much you may be able to borrow. You’ll typically receive a pre-approval letter that can be included with your offer when you’re ready to purchase.
Debt Consolidation
A good lender will look at your overall financial picture, not just the mortgage itself. If you’re carrying credit card balances or other debt, your loan officer can help you understand whether consolidating certain debts could improve your debt-to-income ratio.
Depending on your situation, reducing your debt obligations may help improve your borrowing power or put you in a stronger position when applying for a mortgage. It’s worth discussing your options with your lender early in the home-buying process.
Other Things to Know
- Loan Types: Conventional, FHA, VA, and USDA loans each have different eligibility, down payment, and credit requirements. Your lender can help you determine which option may be right for you.
- Down Payment: You don’t always need to put 20% down. Programs such as Colorado’s CHFA may also provide assistance with down payments and closing costs for eligible buyers.
- Credit & Debt-to-Income Ratio: Your credit history and debt-to-income ratio can affect your interest rate and borrowing power. Your lender can suggest steps you may be able to take to strengthen your financial position.
- Interest Rate: Depending on your loan, your interest rate may be fixed or adjustable. Once you’re under contract, your lender can discuss rate-lock options to help protect your rate while the loan is being processed.
- Total Monthly Cost: Your monthly housing payment can include more than principal and interest. Property taxes, homeowners insurance, mortgage insurance, and HOA dues may also be part of your overall monthly cost.
- Earnest Money & Closing Costs: Earnest money is a good-faith deposit made as part of the purchase process and is generally credited toward your purchase at closing. Closing costs can vary depending on the transaction, lender, location, and loan type.
- Timeline: Financing commonly takes around 30 days from contract to closing, although the timeline can vary depending on the lender, loan type, property, and transaction.
Working Together
Your lender and real estate agent work together throughout the transaction to help keep the process moving forward. From determining your purchasing power to preparing for closing, having the right professionals on your side can make the experience much easier to navigate.
When you’re ready to get started, reach out and we’ll be happy to help connect you with a trusted lender and guide you through the next steps.