Most people think of ‘strict requirements’ when they think of conventional loans in Colorado, but they have many overlooked benefits. Despite the different requirements, eligible borrowers stand to reap many benefits that other loan programs don’t offer.
Don’t believe the 20% down payment myth – it’s just that, a myth. Yes, there are benefits if you make the larger down payment because you avoid PMI, but PMI doesn’t last forever and shouldn’t be a deal-breaker.
First-time homebuyers can make a down payment as low as 3% on a fixed-rate mortgage. Previous homeowners buying another home can put down as little as 5% and still get the attractive rates and terms conventional loans in Colorado offer.
Speaking of low rates and great terms, conventional loans lead the pack in the most affordable options available. They typically have some of the lowest interest rates available out of any loan program and the most attractive terms including low closing costs thanks to the stricter qualifying requirements.
FHA and USDA loans require mortgage insurance for the loan term. If you keep the same loan for 30 years, for example, you pay mortgage insurance for 30 years. Conventional loans, on the other hand, only require Private Mortgage Insurance (PMI) until you owe less than 80% of the home’s value.
Once you hit that milestone, you can request that the lender cancels the PMI. As long as you made your payments on time and the home’s value remains the same (or increased), the lender will cancel your PMI, lowering your mortgage payment.
Unlike FHA loans that have loan limits based on the county’s average home price, the conventional loan limits are the same throughout all of Colorado (or the country for that matter). The maximum loan limits change annually for conventional loans. In 2020, the limit is $510,400, which is a significant increase from 2019’s limit of $484,350.
Even though FHA loans have flexible underwriting guidelines, lenders must follow the strict FHA rules, which means there’s little room for negotiation or wiggle room. Conventional loans have a little more leeway. Even though they have tougher underwriting guidelines to secure the best rates and terms, lenders can adapt to a borrower’s needs a little easier with conventional financing.
I know it’s a big decision to choose your mortgage. You could carry it for the next 30 years and it affects your profit in one of the largest investments you’ll make in your lifetime. I’m here to help you choose the mortgage that suits your needs the most. We’ll look at your finances today and your future financial goals when deciding how to best handle your mortgage financing needs.
Conventional loans in Colorado have many benefits that I’ve seen hundreds of clients enjoy, including the low down payment requirement, which many people don’t realize. If you think you’re a good candidate for conventional financing, let’s talk today – I look forward to working with you.Purchase Qualifier Refinance Rate Checker