Financing

Purchasing a home is likely the largest single investment most of us will make in our lifetime. The process is sometimes complicated and always time consuming. When financing is required to purchase a home it is necessary to know, in advance, what amount you can borrow and what is the most viable source of funds. Count on thirty to forty-five days to secure financing once your property is under contract, if you have been through the pre-qualification process.

Use Local Sources

It is always my advice to work with a knowledgeable local lender or mortgage broker. Someone who knows the Estes Park market, understands the various types of properties available, and works with local appraisers and inspectors is an invaluable asset in securing financing. While you may have “a friend in the business” back home, this market is unique and unless you have someone who understands, it will make financing much more difficult and time consuming – if not impossible.

Banks, mortgage brokers and credit unions are all good sources for local financing.  I can provide you with references for all of these options from sources I have worked with over the years and from people I know can do the job.  Each will have somewhat different requirements, terms and conditions. It is up to you to decide what is right for your financial situation.

The Process

Regardless of which alternative you select, you will need to have lots of up-to-date records. That would include current bank statements,  two-to-three years of tax returns, pay check stubs, account information on investments, saving account balances, personal financial statement, credit card statements, and any balances owing on such things as an auto loan.

A mortgage lender will be able to give you a “prequalification statement” that will give you an idea of the maximum amount of money you would be able to borrow. Armed with this information and the amount of money you have to put down in addition to the mortgage, we will have a pretty good idea of the price range in which to look for property.

The Costs

Initially, the only charges from a lender may be for a credit report. There are many factors that go into a credit score, but generally speaking the higher the credit rating the more likely you are to get a lower interest rate. That also determines how much you can borrow at what rate.

Once you have a home under contract and are proceeding towards actually securing the mortgage there will be many more fees and charges. This would include such items as an appraisal, title insurance policy for the lender and endorsements to that policy, tax service fees, loan origination fees (generally a percentage of the loan amount), and various other fees. You will probably be asked to pay for an appraisal in advance. By the time you are all finished the fees and charges will amount to several thousand dollars. In most cases these can be included in the mortgage, but it should be remembered that you will be financing these charges for 15 or 30 years.

Good Faith Estimate

Lenders are required to provide you with what is known as a “good faith estimate” of fees and charges that you will pay for when you actually close the loan. You should be provided with this document early in the process and the final charges should not change very much when you actually close the loan. This document should detail the expenses so you can understand what you are paying for and not be surprised at the charges when it is time to close. Many lenders will also put real estate taxes and insurance escrow amounts into the estimate so that you will know those in advance. When all is finished, the fees for lender services should not change from what was originally quoted and the other fees for outside services should not vary by more than about ten percent.