Overview of Colorado Mortgages
Residents of Colorado are known for their love of the outdoors – and with such stunning scenery all around them it’s no surprise. Colorado has some very high-end housing and some bargains. Like incomes, home prices in the state vary considerably by location. Colorado mortgage rates tend to reflect the national average. Twenty Colorado counties have conforming loan limits above the baseline $417,000 limit.
National Mortgage Rates
|Loan Type|| |
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Colorado Mortgage Rates Quick Facts
Historical Mortgage Rates in Colorado
Colorado mortgage rates are close to the rates in the rest of the country. 2016 Colorado mortgage rates are on average>lower than 2015 Colorado mortgage rates.
Colorado Historic Mortgage Rates
|Year||Colorado Rate||U.S. Rate|
Colorado Mortgages Overview
When you’re ready to buy a home in Colorado you’ll face the Colorado mortgage market (assuming you can’t afford to pay cash). Unless you can find a bargain or qualify for down payment assistance, you’ll probably need to have a hefty chunk of cash saved up to buy a home in Colorado.
Colorado Mortgage Rates
|Percentage of Homes||77.50%|
|Average Property Value||$221,556.82|
|Percentage of Homes||11.30%|
|Average Property Value||$199,916.48|
|Percentage of Homes||7.20%|
|Average Property Value||$241,681.77|
|Percentage of Homes||3.90%|
|Average Property Value||$198,615.97|
Twenty Colorado counties have conforming loan limits that are above the $417,000 that’s the standard in most U.S. counties. These counties are Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Eagle, Elbert, Garfield, Gilpin, Hinsdale, Jefferson, Lake, Ouray, Park, Pitkin, Routt, San Miguel and Summit Counties. The fact that 20 of the state’s 64 counties have higher loan limits should tell you that home prices in a large swathe of the state tend to be high.
Conforming and FHA Loan Limits by County
|County||Conforming Limit||FHA Limit|
Also of note about the Colorado mortgage market is that, if you default on your home loan and your lender forecloses on the home and sells it at auction, the lender can sue you for the difference between what you owe and the price the home commands at auction.
That difference is known as the “deficiency.” If you think the home didn’t sell for its fair market value and the deficiency is therefore higher than it should be, you can present evidence of this in court.
Most foreclosures in Colorado are non-judicial, which means the lender doesn’t have to take you to court to foreclose on the home. If your home has a “power of sale” clause in its deed of trust you’ll know that it can be sold at auction via non-judicial foreclosure. However, in Colorado, the lender must submit proof of default to a public trustee, who will oversee the foreclosure process.
30-Year Fixed Mortgage Rates in Colorado
Most homebuyers opt for a 30-year fixed-rate mortgage. That means the loan term is 30 years and it will take you 30 years to repay it, unless you refinance or you prepay your mortgage and knock out the debt in a shorter time.
A fixed-rate mortgage is generally a safer bet than an adjustable-rate mortgage because you know what your interest rate will be for the length of the loan and your payments will stay the same for the duration of the mortgage. This gives you financial certainty. As long as your income doesn’t drop, you don’t have other unexpected expenses (like medical bills) and your mortgage is affordable to you when you purchase the home, you shouldn’t have a problem paying off the loan.
The average Colorado mortgage rate for fixed-rate 30-year mortgages is 4.06%.
Colorado Jumbo Loan Rates
Loans that are $417,000 or less are, in most counties, “conforming loans.” That means banks don’t impose special conditions on those mortgages and they can be sold on the secondary mortgage market. In some counties, such as the twenty Colorado counties listed above, the conforming loan limit is higher, in recognition of the fact that home prices in general are higher in those counties.
If you need a mortgage that exceeds the conforming loan limit in your county, you’ll be shopping for a jumbo mortgage. A jumbo loan is by definition one that exceeds the conforming loan limit. In general, jumbo loans come with a higher interest rate because the bank needs more security in exchange for lending you more money.
The average Colorado jumbo loan rate is 4.12%.
Colorado ARM Loan Rates
Unlike a fixed-rate mortgage, an adjustable-rate mortgage isn’t a sure thing. ARMs start with an introductory period, which could last for one, three, five, seven or 10 years. During that introductory period, the interest rate on an ARM is generally lower than the fixed interest rates in the same mortgage market.
Opting for an ARM over a fixed-rate mortgage to take advantage of the lower rate isn’t a risk-free strategy, though. That’s because after the introductory period has ended the rate on an ARM can go up. The maximum increase will be stated in the loan documents, but it can be substantial – and substantially increase your monthly payments. Some homeowners can’t keep up with their mortgage payments once the interest rate on their ARM jumps up. If you’re worried that you might find yourself in this situation it’s probably safer to opt for a fixed-rate mortgage.
The average rate for an ARM in Colorado is 3.1%.
Colorado Mortgage Resources
If you want some help buying or holding on to a home in Colorado, the Colorado Housing Finance Authority is there for you. If what’s holding you back from buying a home is the down payment you can apply for a CHFA DPA Grant (DPA stands for down payment assistance).
If you qualify you can get up to 3% of your first mortgage loan in a grant that you never have to pay back. You can use that grant money to cover a down payment and/or closing costs. Additional help comes in the form of the CHFA’s Borrower Premium Program. The program gives your lender a credit that equals either 1 or 2% of your home loan. The lender can then use this money toward your closing costs to reduce or eliminate what you owe.
If you have at least 3% of your target home price to put toward a down payment (this can be a gift) you may be eligible for a CHFA Advantage mortgage or the CHFA Preferred mortgage. The latter can be combined with a DPA Grant and the Borrower Premium if needed.
Those who have just $1,000 to put toward a home sale and who meet income and credit score limits may want to participate in the CHFA SmartStep mortgage or the CHFA HomeOpener loan program. The SmartStep program has the lowest interest rate of all the CHFA programs. The HomeOpener program has no purchase price limit and has higher income limits than the other CHFA programs.
|Resource||Problem or Issue||Who Qualifies||Website|
|Colorado Housing Finance Authority||Offers down payment assistance, closing cost assistance, low-income housing tax credits and special loan programs for the disabled and low-income individuals.||First-time homebuyers who meet income limits with a minimum credit score of 620 (for most loan programs).||https://www.chfainfo.com/|
|Home Affordable Refinance Program||Refinancing.||Single family homes and condos that fit within lending loan limits.||http://www.harp.gov/|
If you’ve been receiving Section 8 rental vouchers for at least a year you may be eligible for the CHFA “SectionEight Homeownership” program. If you meet credit and income requirements, are a first-time homebuyer and complete homebuyer education you may be able to go from being a Section 8 renter to being a homeowner.
There are specific benefits available to Coloradans with disabilities. CHFA HomeAccess is a loan designed help Coloradans with a permanent disability (or the parent(s) of a child or children with a permanent disability) make their first home purchase.
There are income limits that vary for each CHFA program and, sometimes, by Colorado county.
Colorado Mortgage Taxes
Colorado has a real estate transfer tax of 0.01% that applies to the money you make when you sell a home in Colorado. But what about your regular income taxes? Colorado has a flat income tax rate of 4.63% that’s applied to the income that’s taxable when you fill out your federal income tax return. Your taxable income is your gross income minus deductions.
It’s up to you to determine whether it’s more advantageous to take the Standard Deduction or to itemize your deductions (including the mortgage interest you paid throughout the year) when you do your federal income taxes. Whichever you choose will help determine your federal taxable income, which in turn will be entered when you fill out your Colorado income tax return.
Colorado Mortgage Refinance
When it’s time to refinance your Colorado mortgage you have a few options. You can reach out to your current lender and ask about the refinance mortgage rates available to you. But you’re not limited to the lender who gave you your first home loan. You can shop around and refinance with another lender. Keep in mind that when you refinance you will pay closing costs again, so it’s important that the benefits of refinancing outweigh the hassle and cost.
If you got your original loan through the CHFA, you can go back to the Colorado Housing Finance Authority for your refinance mortgage. CHFA offers a 30-year, fixed-rate CHFA-to-CHFA refinance for FHA loans. You must have had your mortgage for at least six months, be current and have made all payments on the mortgage within the month due for the previous 12 months. For mortgages that are between six and 12 months old, you must have made all payments on time, not just within 30 days of the due date.
If you qualify for the program you can participate without any minimum financial investment on your part. There are no income limits for participation, but the loan limit is the same as the conforming loan limit in your county.
See Mortgage Rates in These Other States
Best Places To Get A Mortgage
SmartAsset’s interactive mortgage map highlights the best counties in the country (and in each state) for securing a mortgage. Hover over counties and states to see data points for each region, or use the map’s tabs to view the top counties for each of the factors driving our analysis.
Methodology For many people buying a house means securing a mortgage. To determine the best places in the country to get a mortgage we looked at four factors: overall borrowing costs, ease of securing a mortgage, cheap property taxes and cheap annual mortgage payments.
To calculate the overall borrowing costs, we looked at the expected costs over the first five years of a $200,000 mortgage with a 20% down payment, including closing costs. We calculated the ease of getting a mortgage as the ratio of mortgage applications to actual mortgage originations (secured mortgages) in each county. We based annual mortgage payments on the annual principal and interest payments for a $200,000 loan in that location, using average mortgage rates in each county.
Finally, we ranked locations based on these four factors, and then averaged those rankings, giving equal weight to each factor. The areas with the lowest average rankings are the best places to get a mortgage.
Sources: Mortgage Bankers Association, US Census Bureau 2015 5-Year American Community Survey, Informa, Bankrate, government websites, SmartAsset