Financing

Understanding the Total Cost of Home Ownership

Understanding the Total Cost of Home Ownership

You’ve diligently completed the recommended steps of the home-buying process. You are pre-approved for a mortgage loan and are starting to look at homes in your price range. You may even be thinking about making an offer on a home that fits your needs and wants. This is the exciting part of the process where home ownership gets real. While you are in this stage of the home buying process, take some time to calculate the TCO, total cost of ownership. Definition of TCO Total Cost of Ownership is so much more than simply your mortgage amount. No doubt, the mortgage amount is an important one, and comprises the bulk of your monthly budget for home ownership. But, several other amounts come into play when figuring out the TCO. Taxes, insurance, utilities, regular maintenance, and HOA dues should all be part of what you look at when figuring out the true total cost of ownership. Taxes Property taxes are an important part of the TCO equation, as they can vary greatly from area to area. Property taxes typically include taxes for the school district, any improvements in the area, and any mill levies for the area. Previous amounts paid by prior owners of a property are often available online or upon request. Homeowners Insurance Insurance for your home is another substantial and important expense. Homeowner’s insurance covers your home’s replacement value if it is damaged or destroyed by a covered loss, such as fire. The cost of your insurance can vary greatly, depending on what deductibles you choose, the home’s details, and the area you are buying in. Quotes...
The Meaning of Mortgage Rates

The Meaning of Mortgage Rates

We all know mortgages are required the vast majority of the time when we buy a home. We also know they are a serious responsibility, but we may not know the nuts and bolts of mortgages. Learning a few basics about mortgages can make them a little less mysterious and enable you to choose the best mortgage when you decide to buy a home. Mortgage Rate Definition First, the definition of a mortgage rate is simply the rate of interest charged on a mortgage. It is typically set by the financial institution or bank that you are obtaining your mortgage from. The mortgage rate will vary depending on the interest rate, which is set by the Federal Funds Rate. This rate can be changed several times a year, and can instantly change your mortgage rate, if you are applying and not locked in. Mortgages: ARM versus Fixed Rates Mortgage rates typically can be divided into two different categories, a fixed-rate mortgage or an ARM mortgage. A fixed-rate mortgage simply means that you will pay the same amount on your home (not including taxes or insurance) , whether you choose a 15-year fixed-rate mortgage or a 30-year fixed rate mortgage. This security works well because there are no surprises with a fixed-rate if rates rise or inflation spirals out of control. The downfall is, if interest rates fall substantially, you will have to refinance to see the savings. An ARM mortgage is an adjustable rate mortgage. This means that you may start out with a fairly low interest rate on your mortgage for a set number of years, but after...
Resources and Tips for House Hunting Online

Resources and Tips for House Hunting Online

You’ve decided to take the leap, concluding that owning your own home, and paying a mortgage instead of rent, is the best choice for you and your family. Like most others in this situation, the first place you will likely turn to begin your home-buying research will be the Internet. With so many websites competing for your attention, it can be a bit overwhelming determining which will be most useful in your home search and home buying process. Read on to learn more about a few of the most popular websites, and discover valuable tips for getting the most out of online resources. First, the money… Before you start perusing real estate sites, take a look at mortgage calculators and get an idea of what you can afford on your budget. Mortgagecalculator.org is a great place to start. Though there are a blue million online calculators out there, this one comes with extra features including a handy mortgage repayment summary and monthly vs. bi-weekly payment comparisons. Simply input the amount of the home, the amount that you are planning to use as a down payment, and the term of your loan, and the calculator will forecast your monthly payment amount. The calculator will also factor in property tax and current interest rates. And, if you are putting less than 20% down, the calculator will also calculate PMI (Property Mortgage Insurance). Then, getting the money… Most lender websites have ample information to get potential home buyers started on their paths to ownership. Many feature online applications for pre-approval. Though pre-approval is generally considered an important part of the mortgage process,...
Are Interest Rates Higher On New Home Construction?

Are Interest Rates Higher On New Home Construction?

If you’re thinking about building a new home in Colorado Springs, you might have done some research on financing — and that research might have made you nervous. When you look up information about financing new home construction online, it seems like a complicated and intimidating process that probably leaves you wondering — are interest rates higher on new home construction? Most new home construction is not that complicated Forget everything you have read online about having enough cash to buy the lot outright and needing to secure a short-term construction loan or a bridge loan. That all applies to completely custom homes where your home builders aren’t working with you to make the financing easy. Most new home construction is not that complicated. The home builders do all the heavy lifting When you build a home in Cordera or most other master-planned communities in Colorado Springs, the home builders will handle all of the complicated financing issues for you. They get the construction loan and build your house. You don’t have to do anything different than you would if you were buying an existing home because your house is finished and ready for you to move in when you close on it. Interest rates are not higher on new home construction Because you can buy a brand new home in a master-planned community with the same home loan you would get to buy an existing home, you can do it without worrying that it will cost more in the long run. Interest rates on new home construction are no different than they are on mortgages for existing homes....
Can I Get a VA Loan on a New Home?

Can I Get a VA Loan on a New Home?

You can absolutely get a VA loan on new construction. In Colorado Springs, most builders and developers make it particularly easy for veterans. How do VA loans work? If you are active duty in the U.S. military, a veteran or eligible surviving spouse, you might be eligible for a VA home loan. The Department of Veterans Affairs guarantees up to 25% of a VA loan, allowing servicemen and women to buy new homes with no money down, no mortgage insurance and more favorable loan terms. What do I need for a VA loan? You will need a certificate of eligibility from the military branch you serve or served, and to meet all of the other loan qualifications for income and credit. How is the loan different when you buy a new house? In most cases, when you work with a Colorado Springs home builder in a master-planned community like Cordera, there is no difference between the VA loan you will get for a brand new home and the one you would get for an older home. You probably won’t finalize the loan until your new house is finished and you have completed the final walkthrough, meaning you won’t have to make double payments while your new house is under construction. What is the building process like with a VA loan? Just as if you had any other kind of loan, you will pick the builder, the floor plan and the lot you want. Once you decide on the upgrades you’d like to add and a final sale price, you’ll apply for your VA loan. What are the advantages of...
Home Buying Considerations for Colorado Military Families

Home Buying Considerations for Colorado Military Families

If you’re active-duty, reserve or a veteran in the U.S. military and want to build a new Colorado Springs home, you’ll find you have several home-buying advantages. VA loan You might already know about the VA-guaranteed home loan, and you might even have one already. If so, you know the loan enables you to buy a house with no money down at a low interest rate and to avoid paying mortgage insurance. It’s a pretty amazing loan program that makes home ownership affordable for the men and women who serve our country. VA loans for new construction Typically, it’s not easy to get a VA loan for new-home construction. That’s one reason many Colorado Springs home builders, including those who build in Cordera, do things a bit differently. The builders will finance the construction themselves and sell you a finished house so you can get a normal VA loan. You’ll be able to move into your brand new Colorado Springs home and be the first and only occupant without the hassle of construction loans. Remaining entitlement and restoration If you already own a home with a VA loan and want to build a new Colorado Springs home, you will need to reach out to the local VA office and submit a form 26-1880 in order to be able to access your remaining entitlement or to restore your entitlement after you pay off your current loan. This is something that can usually be accomplished seamlessly, so there’s no gap between selling your current home and moving into the new one. Proximity to bases If you’re thinking about building a new...
How Do Colorado Lenders Determine The Maximum Home Mortgage Amount?

How Do Colorado Lenders Determine The Maximum Home Mortgage Amount?

If you’re thinking about buying a new Colorado Springs home, your first stop should probably be with a mortgage broker or lender. Before you start looking for the perfect home, it’s a good idea to know what you can afford. You might already have a pretty good idea, but a lot of homebuyers are surprised — often pleasantly — by how much they can actually afford once they begin investigating the borrowing process. So how do lenders determine how much house you can afford? The general rule Most, but not all, lenders apply the 28 percent rule. That means the total monthly mortgage payment, including taxes and insurance, on your new home can’t exceed 28 percent of your gross monthly income. If you have other debt or financial obligations, the new mortgage plus the monthly minimum payments on other obligations can’t exceed 36 percent of your monthly gross income. Both of these rules can be flexible. Some lenders live by them, some are stricter and a few are more lenient. Whatever your lender’s rule, these are decent guidelines to help you determine what you can afford. Credit Your credit history can also have a bearing on how much you can borrow. Lenders are likely to judge you more leniently when you’re on the edge of affordability if you have good credit; and your loan is more likely to be approved at a favorable interest rate that will keep your monthly payments lower if you have a good credit history. What you’re buying While lenders are loaning money to the homebuyer and will primarily judge the buyer, they will also...
How Do I Know When I’m Ready to Buy a House?

How Do I Know When I’m Ready to Buy a House?

For a long time, this question was reserved for first time homebuyers. But it’s a good question for even more people now that the market has turned and many homeowners have equity again. If you’re thinking about buying your first Colorado Springs home or moving from your current house, we have a few questions that could help you decide if you’re ready. Could I make a good down payment? This is the first and biggest question you need to ask yourself. Unless you are military and can qualify for a VA-guaranteed home loan, you will need to make a down payment on your new Colorado Springs home. FHA loans typically require at least 3.5 percent down and conventional mortgages require at least 5 percent down, though you’ll usually have to pay private mortgage insurance if you have less than 20 percent of the purchase price to offer as a down payment. Do I have savings? Aside from making a solid down payment, you will want to have enough savings to cover a few months of your mortgage if you lose your job or fall on hard times. Can I get a down payment if I sell my house? This is a question many homeowners were afraid to ask themselves the last several years. After the market collapsed and home prices fell, a lot of people owed more on their houses than they were worth. Since home prices have been climbing dramatically the last year and a half, many homeowners will be pleasantly surprised to learn they can walk away from selling their house with a healthy down payment for...
Insuring Your New Colorado Springs Home

Insuring Your New Colorado Springs Home

If you’re thinking about buying or building a new home in Colorado Springs, homeowner’s insurance is probably not the first thing on your mind, but it should be in the back of your head. Before you can get a mortgage on any house, new or old, you have to have homeowner’s insurance. And insurance is still advisable even if you don’t have a mortgage. There are nearly 800 homeowners in the Colorado Springs area who can tell you just how important homeowner’s insurance is. Between the Waldo Canyon Fire in 2012 and the Black Forest Fire in June of 2013, that’s how many homes were lost locally. Cordera’s insurance advantage Both Colorado Springs fires occurred in heavily forested areas. Cordera has beautiful vegetation and scenery, but without a lot of the risk that comes with living in the wild land urban interface where those fires were. Cordera is also located nearby a professional fire department and is outfitted with an extensive network of fire hydrants. Additionally all of the homes in Cordera are newer, and none have shake shingle roofs. Saving on homeowners insurance If you’re thinking about building a new home for the first time, you might expect the insurance to be more expensive than it was on your last house. However, that’s often not the case. Simply choosing a new home that meets all the current building code requirements and includes extra safety features and modern materials can actually result in lower insurance premiums. Aside from choosing new construction, there are several ways you might be able to save on your homeowner’s insurance. Shopping around for the...