Mortgage Loans in Colorado
Obtaining a mortgage in Colorado can depend on the mortgage lender or mortgage broker helping you find a home loan. The process also can change slightly based if you are obtaining a conventional mortgage or VA mortgage or FHA mortgage loans. In Colorado, mortgage lenders and broker’s approval process may differ slightly, however, there is a general process you can expect when applying for a mortgage loan to purchase a home.
You will need to provide your mortgage lender with your personal, employment, and financial information, and you will discuss your goals with a loan officer or mortgage broker. You will also need to provide your loan officer or mortgage broker with documents that will usually include:
- W-2 and tax returns covering the last two years
- Pay stubs for the last 30 days
- Bank Statement and other asset documents covering the previous 60 days
Your mortgage loan officer or mortgage broker will obtain a credit report and complete the mortgage application using the documents you provided to the lender. Most mortgage lenders will submit your application and credit report to an automated underwriting (AU) engine to obtain a pre-approval. Mortgage lenders and AU engines will consider your credit, debt-income ratio, assets when determining mortgage approval.
While it’s impossible to list every mortgage program and their guidelines, in general mortgage lenders in Colorado will require a credit score of at least 620, a debt-income ratio of 45% or lower, and enough assets to cover you down payment.
Locking Your Interest Rate
Once you find a house and have a contract accepted you can lock your mortgage interest rate with most mortgage lenders in Colorado. Mortgage rates are usually quoted on a 30 day lock, but can be locked at 15 (at a discount) and at 45 and 60 days (at a cost). Locking your interest rate protects you from any increase in mortgage rates, but it also prevents you from taking advantage of lower rates if the market falls. Locking your interest rate can tricky proposition depending on market conditions, however, if you lock your rate at payment that is acceptable it’s tough to lose. You may not always receive the best rate, but you will never lose your mortgage or jeopardize the purchase of your dream home.
Now that you have locked your interest rate your loan officer or mortgage broker will provide you with loan disclosures and possibly a list of updated documents they will need to submit the loan. It’s important you review the mortgage disclosures closely with your loan officer or mortgage broker and provide them any documents they need in a timely fashion. Below you can find examples of important disclosures:
Your mortgage lender will obtain the title commitment from the title company and will order a real estate appraisal once the property has passed home inspection or you and the seller have agreed on an inspection resolution. A mortgage loan processor will prepare your application and file to submit to underwriting for final approval.
Your loan package will be reviewed by an underwriter and they will base their decision on the automated underwriting findings and the program guidelines. The underwriting process can be as quick as 24 hours with some lenders and take over three weeks with other mortgage lenders. An underwriter can approve your loan for closing, deny your mortgage application, counter to a different mortgage program/term, or approve your loan with conditions.
If your loan is approved with conditions, which is typical, your loan officer may need to obtain additional documents to clarify an issue for underwriting or they may have submitted your loan to underwriting before they received the completed appraisal and they just need to provide the appraisal for final approval.
After you meet all loan conditions you will receive final approval from underwriting. Once you have final approval your mortgage lender will send figures to the title company so they can prepare a HUD-1 settlement statement for closing. The settlement statement itemizes all actual settlement costs for the buyer and the seller, and will determine the actual funds you need to bring to closing. The lender approves the HUD and will send the title company the mortgage closing documents.
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