Colorado Mortgage Rates

Living in Colorado

If you love the outdoors, it’s hard to beat living in Colorado. The Rocky Mountains are the state’s best-known natural feature, but Colorado also offers 41 state parks, 700 miles of hiking trails, deserted gold mines and about a dozen popular skiing areas.

Last year, Colorado ranked among the top 10 states as measured by population growth. This year, the growth of the state’s economy is projected to slow a bit, but the state is still adding jobs even in the face of low unemployment.

Colorado is a mix when it comes to housing market trends. In general, prices are still increasing, and a single-family home now has a median sales price of $400,000, up 2.4% over the past year, according to the Colorado Association of Realtors. Meanwhile, the number of active listings is down, while the number of new listings is up 1.7%.

Prices are up even more in some parts of the state. In El Paso County, home to Colorado Springs, the median price is now 8% higher than a year ago. Denver, however, is another story. There, home prices have dropped 0.7% over the past year, and the city now has 25% more active listings for townhomes and condos than last year. This means there’s more inventory for homebuyers who aren’t attached to living in a traditional, single-family home.

Overall, the Colorado housing market is competitive, so if you see a home you want, act sooner rather than later. If you make an offer, keep in mind that homes are typically selling for 99.3% of the list price.

The rules and costs of buying a home in Colorado

Colorado has laws in place to protect homebuyers, and like some states, it also allows for two kinds of foreclosures.

Home seller and buyer laws

Sellers in Colorado are required by a series of statutes to disclose certain property issues, such as whether the home is in a special taxing district or part of a homeowners association (HOA). Real estate brokers are required to have sellers complete a >property disclosure form from the Colorado Division of Real Estate. Sellers are required to disclose numerous details about the home’s condition, improvements and defects; failure to disclose could make the seller legally liable.

If you’re buying in Colorado, you may also want to check whether the home you’re considering has a “green disclosure” form for it. This form asks sellers to confirm that their home has certain energy-efficient features, such as low-flow showerheads and high-efficiency boilers and water heaters.

In Colorado, buyers are not required to have an attorney present at closing. Colorado is a so-called escrow state, and representatives from title insurance companies typically act as the escrow agent to close on the purchase.

When it comes to foreclosing on a home, Colorado allows for both judicial and non-judicial foreclosures. Judicial foreclosures require the lender to go to court and get a decree that allows a foreclosure sale.

In Colorado, non-judicial foreclosures are more common, but the process is slightly different from other states. A county public trustee handles the process, and there is some court involvement, although it is minimal. After a lender starts a non-judicial foreclosure in Colorado, the borrower receives a notice with the date of sale and an explanation of the borrower’s rights. Before the sale goes forward, a lender also needs to request a hearing in a county district court to get an order authorizing the sale. If you believe the home is not in default, you may testify at the hearing.

Colorado is an equitable distribution state when it comes to dividing up property after a divorce. This means a court may step in to ensure a divorcing couple fairly divides all assets (including property) and debts obtained during the course of the marriage. In community property states, all property is split 50/50. In Colorado, however, everything is divided according to factors such as each party’s financial situation, earning capacity and how long the marriage lasted.

Taxes

When a home is sold in Colorado, a buyer is required to pay a recording fee, now $.01 for every $100 of the purchase price; this makes the purchase a matter of public record.

Colorado doesn’t have a statewide transfer tax, but local municipalities usually do, and rates vary. For example, the town of Breckenridge has a 1% transfer tax, while Avon requires a 2% transfer tax. Like other states, some Colorado municipalities offer certain transfer tax exemptions, such as when a home is being given as a gift or inherited.

Property taxes in Colorado are more reasonable than in many other states. According to Tax-Rates.org, residents are now taxed annually at the rate of 0.6% of a home’s assessed value, and the median tax bill is $1,437 per year. As with most states, property taxes in Colorado vary by county and are based on home value. In Douglas County, which is in between Colorado’s two largest cities, Denver and Colorado Springs, residents pay an average of $2,590. By contrast, residents pay an average of just $317 in sparsely populated Costilla County in the southern part of the state.

Colorado offers property tax exemptions to qualified homeowners. The state has a property tax deferral program for active military personnel and those over 65; tax payment is deferred until a home is sold. Under a property tax exemption program, the state also offers seniors and their surviving spouses — as well as disabled veterans — an opportunity to annually exempt 50% of the first $200,000 of the value of their homes.

Conforming loan limits

Conforming loan limits refer to the maximum amount that can be loaned for mortgages purchased and insured by Fannie Mae and Freddie Mac, which are government-supported entities. For homebuyers with excellent credit, conforming loans usually offer the best interest rates.

The conforming loan limit is set by the Federal Housing Finance Agency (FHFA) each year. For 2019, the limit is $484,350, but there are allowances for higher-cost areas. Most Colorado counties are at the $484,350 loan limit, but there are several exceptions. Garfield and Pitkin counties have the highest loan limits, at $718,500.

Programs for homebuyers in Colorado

The Colorado Housing and Finance Authority (CHFA) offers several programs to make homebuying more affordable. The programs offer 30-year, fixed-rate mortgages and help paying down payment and closing costs. To learn more about the programs, start by going to this CHFA homeownership site and reviewing this list of participating lenders.

CHFA Advantage

This program offers a conventional, 30-year, fixed-interest-rate mortgage for qualified buyers. The maximum loan limit is $484,350.

Who qualifies:

  • Borrowers must meet the income limit of $120,100.
  • Borrowers must complete a CHFA-approved homebuyer education course.
  • Borrowers must contribute at least $1,000.
  • Borrowers must have a credit score of at least 680.

CHFA Preferred/Preferred Plus

The Preferred program offers a conventional 30-year, fixed-interest-rate mortgage, while the Preferred Plus program also offers a grant or second mortgage to help cover down payment and closing costs. The grant covers up to 3% of the first mortgage amount, while the second mortgage covers up to 4% of the same amount.

Who qualifies:

  • Borrowers must meet the income limit of $120,100.
  • Borrowers must complete a CHFA-approved homebuyer education course.
  • Borrowers must contribute at least $1,000.
  • Borrowers must have a credit score of at least 620.

CHFA SmartStep/SmartStep Plus

This program offers government-insured, 30-year, fixed-interest-rate mortgages either as FHA, FHA 203(k), VA or USDA Rural Development loans. SmartStep Plus combines the mortgage with a grant or second mortgage to provide down payment and closing cost assistance. Government-insured loans can offer buyers better loan terms, by allowing a lower credit score or requiring a lower down payment.

Who qualifies:

  • Borrowers must meet the income limit of $120,100.
  • Borrowers must contribute at least $1,000.
  • Borrowers must complete a CHFA-approved homebuyer education course.
  • Borrowers must have a credit score of at least 620.

CHFA FirstStep/FirstStep Plus

This program offers first-time buyers or qualified veterans a 30-year, fixed-rate mortgage along with an optional second mortgage. The second mortgage is for up to 4% of the loan amount and can be used to make a down payment or pay closing costs.

Who qualifies:

  • Borrowers must be a first-time homebuyer or qualified veteran.
  • Borrowers must complete a CHFA-approved homebuyer education course.
  • Borrowers must meet income limits.

Rate shopping tips

It’s important to remember that interest rates vary by lender. Even a slightly lower interest rate can save you thousands of dollars over the life of your mortgage, so it pays to shop around and check rates with smaller, local lenders and credit unions, as well as large national banks. Here are a few more mortgage-shopping tips:

Contact at least three lenders on the same day

Mortgage rates fluctuate daily. To make the fairest, most direct comparison between lenders, it’s best to contact them on the same day.

Give each lender the same information

Be sure to give each lender the exact same information to ensure you’re asking for the same type of mortgage. This will include letting lenders know the price of the home you want to buy, how much down payment you can afford, and the type of loan, say, a 30-year, fixed-rate mortgage versus a 15-year, adjustable-rate loan. Your lender will also want to know your income and the amount of assets and debt in your name. This means you’ll eventually need to provide pay stubs, tax returns and other forms, such as statements for bank, credit and retirement accounts.

Add up all the lender fees to confirm the costs

Yes, your interest rate is important, but there are other costs to consider, too, such as the fees that lenders charge to process and close your mortgage. Expect to see fees for the application, the lender’s attorney and for recording your mortgage as a matter of public record. By law, lenders are required to list these fees on the loan estimate you’re entitled to receive within three days of applying for a mortgage. Your loan estimate should also tell you whether you might receive a lender credit, as well as how many points you may have to pay in exchange for a lower interest rate.

Know when to lock in the rate

By locking in your interest rate, you may be able to avoid an unpleasant surprise if market interest rates rise before you actually close on your new home. Many lenders are willing to lock in your rate when you get a loan estimate, but you’ll need to ask. You may also ask what type of lock is possible; 30 to 60 days is often possible, and 120 days might be doable, too. Some lenders also offer a “float-down” option if interest rates drop.

The information in this article is accurate as of the date of publishing.