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Costs

Having your ducks in a row! 

Cozy Winter Cabin

When purchasing a property there are a couple of different types of costs. Having these costs calculated by a Lender is a Buyer's top priority before starting home showings. If the financials are not worked out, it leads to disappoint. 

 

1) Upfront costs (Inspections) 

2) Down payment (Depends on loan type and funds available) 

3) Fixed costs (Title Fees, Lender Fees, Other Fees) 

4) Pre-paid costs (Insurance, Taxes, Interest) 

Loan Types - Down Payments 

Closing Costs 

Upfront Costs

Conventional Loan 

  • Most common loan product used 

  • Can do as little as 3% down as a first-time homebuyer or 5% down as a seasoned buyer on a primary residence (2nd homes or investments properties require more)

  • Mortgage insurance is required if putting less than 20% down, but is not permanent 

  • Easiest appraisal standards

  • Best use with someone with a credit score of 700+

FHA Loan

  • Original low-down-payment loan product 

  • Con do as little as 3.5% down - even on a duplex! 

  • Mortgage insurance is required, and if putting less than 10% down is permanent for the life of the loan

  • Has 1.75% upfront mortgage insurance premium (can be financed) 

  • More rigorous appraisal 

  • Best used with someone with credit scores below 700 (can go as low as 580) 

VA Loan

  • Available to veterans, active-duty military, and their spouses 

  • Allows you to finance 100% of the property - 0% down payment 

  • Mortgage insurance is waived 

  • Has funding fee that's determined by your certification of eligibility 

  • Can be used with credit scores down to 580 

  • Similar rigorous appraisal standards of FHA 

USDA Loan 

  • Geared toward Buyers in 'rural' areas 

  • Income restricted & debt to income ratio more restricted 

  • Allows you to finance 100% of the property - 0% down payment

  • Mortgage insurance is required but not as expensive as FHA

  • Has 1% guarantee fee - can be financed 

  • Eligibility criteria can be found HERE

CHFA Loan 

  • Most commonly used down payment assistance program for Colorado 

  • Income is restricted per county 

  • Can be paired with Conventional, FHA, VA, & USDA

  • Credit score down to 620

  • Provide 4% of assistance toward down payment & closing costs 

  • Only requires a $1,000 contribution from Buyer 

Earnest Money 

Earnest money is the Buyer's "skin in the game," and is collected at the time of going under contract. The amount is set by the Seller but is typically around 1% of the list price. The Buyer can change this amount in their offer (higher/lower.) This money is applied to what is owed at closing for the down payment and closing costs. 

Credit Report 

A fee that covers the cost of the credit report. 

Appaisal

This is a one-time fee that pays for an appraisal. The appraisal is made by an independent Appraiser. 

Document Preperation 

There may be a separate fee that covers the preparation of the final legal preparation papers .

Loan Discount

A fee used to adjust the yield on the loan to what market conditions demand, It is often called "points." 

Loan Origination

The Lender's administration costs in processing the loan. This fee covers the loan. 

Title Charges 

The Title Company charges a premium for the new loan and owners policies, endorsements fee, recording fees, closing fees, and notary fees as applicable 

Prepaid Interest 

Depending on the time of the month your loan closes this pre diem charge may vary from a full month's interest to that of a few days. 

Taxes & Insurance 

Taxes will be prorated accordingly based on the closing date for the current tax year. You will need to pay a year's hazard insurance premium upfront. Also, you might be required to put a certain amount of taxes and insurance into a special reserve account held by the lender. 

Important Colorado Property Tax Dates 

  • Taxes for the 1st half of the current year:  Due March 1st 

  • Taxes for the 2nd half of the current year: Due June 15th

  • - OR - Full payment: Due April 30th

Inspections 

Inspections are paid at the time of service. 

General estimate as of 2023: 

  • Home Inspection: SFH $425+ / Condo $375+

  • Radon: $145+

  • Sewer Scope: $145+

  • Well Testing: $150+ 

Survey

There are many types of surveys a Buyer may want depending on the information they are seeking or future plans they are researching. The price is from hundreds of dollars to thousands depending on the Buyer's needs. 

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