Welcome back, future Denver homeowners! As you get closer to making the exciting transition from renting to owning, understanding mortgage terminology is crucial. Don't let unfamiliar terms intimidate you – we're here to break them down and help you navigate the mortgage process with confidence. Let's explore some key mortgage terms you'll encounter as you prepare to buy your first home in Colorado.

• Introduction

• Mortgage Options

• Insider Advice

4. FHA Loan

   • Insured by the Federal Housing Administration

   • Lower down payment requirements (as low as 3.5%)

   • Great for first-time buyers in Denver's competitive market

5. Down Payment

   • The initial upfront portion of the home's purchase price you pay

   • Typically ranges from 3.5% to 20% of the home's value

   • Example: On a $500,000 Denver home, a 10% down payment would be $50,000

6. Private Mortgage Insurance (PMI)

   • Required for conventional loans with less than 20% down payment

   • Protects the lender if you default on your loan

   • Can be removed once you reach 20% equity

7. Escrow

   • An account held by a third party to hold money and documents

   • Often used to collect property taxes and insurance payments

   • Helps manage these expenses by spreading them out over the year

8. Closing Costs

   • Fees associated with finalizing your mortgage

   • Typically 2-5% of the loan amount

   • Example: On a $400,000 loan, expect $8,000 to $20,000 in closing costs

1. CHFA (Colorado Housing and Finance Authority) Loans

   • Offers down payment assistance and competitive interest rates

   • Great for first-time buyers in Denver

2. Colorado FirstStep Program

   • Provides up to 4% of the loan amount for down payment and closing costs

   • Available for both first-time and repeat homebuyers

1. Pre-Approval

   • An initial evaluation of your creditworthiness

   • Gives you a clear idea of how much you can borrow

   • Strengthens your offer in Denver's competitive market

2. Underwriting

   • The process of evaluating your loan application

   • Involves reviewing your financial documents, credit history, and the property's appraisal

3. Closing

   • The final step where you sign all necessary documents and receive your keys

   • Typically takes place 30-45 days after your offer is accepted

The Martinez family, first-time buyers in Denver:

• Chose a 30-year fixed-rate conventional mortgage at 4.25%

• Purchase price: $550,000

• Down payment: 10% ($55,000)

• Used the Colorado FirstStep Program for $16,500 in down payment assistance

• Monthly payment (including taxes and insurance): $2,800

• They felt confident throughout the process thanks to their understanding of key terms and local programs

1. Shop Around

   • Compare rates and terms from multiple lenders

   • Even small differences in rates can save thousands over the life of the loan

2. Ask Questions

   • Don't hesitate to ask your lender to explain any terms you don't understand

   • A good lender will be happy to clarify and ensure you're comfortable

3. Consider the Future

   • Think about how long you plan to stay in the home when choosing between fixed and adjustable rates

   • Factor in potential career changes or family growth

What’s Next?