It’s common knowledge that Colorado’s housing market is through the roof. With low inventory, high list prices and interest rates creeping up, it’s tricky to purchase a home in one of the country’s most beautiful and competitive environments.
But it can be done. To get some inside advice, we caught up with the local experts at Elevations Credit Union. Here are some tips from their mortgage team on buying a home in a tough market, what pre-planning steps you can take to streamline the process and mortgage options for prospective homebuyers who want to live the Colorado dream.
“The current real estate landscape is brutal and disjointed,” says VP Mortgage Sales Cameron White-Ford. “Prices are up substantially and most homes still receive multiple offers. When you hear about the market cooling it just means, two to three competing offers instead of 10.”
Last month in Colorado the average home sold for 3% over the list price, just as it did in May of 2021. While universally hot,
by any measure, sales in Northern Colorado are down year over year, while in Southern Colorado they’re up. “I do think the market is cooling off, but demand still
far outstrips supply which will not change overnight,” White-Ford says.
Millennials — the biggest set of first-time homebuyers — are getting the shortest end of the stick. “We did not build enough homes over the past decade and the largest age group of that cohort is just now hitting the average age (34) of a first-time homebuyer,” he says.
Leveraging your local lender
Using a local lender like Elevations Credit Union for a home purchase is a smart move because they function more as a partner with you and your Realtor. “Your loan is not just a transaction, it’s a relationship,” White-Ford says. “That means doing everything in our power to get you into the house you want, with the right loan and a smooth closing.”
Accountability is key. “Out-of-state lenders don’t live next door. You won’t bump into them at the grocery store and they may not be there when you need them most,” he says. “Buying a home is stressful, you want a local lender by your side. I’ve saved a lot of borrowers from out-of-state lenders who just stop answering the phone. I’ve never run into that with a lender in our community.”
There are numerous lending options for new home buyers and customers looking to refinance. ARM loans, fixed for 7 or 10 years, have become much more popular as they are now meaningfully lower than a 30-year fixed loan. “Current homeowners have also likely refinanced many times in the past decade either for a lower rate, to pull cash out or switch to a shorter amortization,” White-Ford says. “As such, they know they are likely to refinance again in the next 7 to 10 years. That said, we never recommend getting a loan that will keep you up at night.”
White-Ford says the other advantage of working with a local lender is honesty. “We pretty much have all of the mortgage types you need, but, more importantly, if we don’t have the right loan for you, we’ll tell you and help you find someone who does.”
Tips for mastering your mortgage
Here are more tips to help you compete in the Wild West of home buying:
“My favorite conversations are with people looking to buy six months out. If you aren’t calling a lender until the day you make an offer, you are doing it wrong. You aren’t buying a car,” says White-Ford. “Same goes with the fun part, looking at real estate. It’s a good idea to see what is coming on and off the market to get a good sense of what is out there. If you watch homes come and go for six months when you’re ready to buy you’ll have a better sense of what’s a good price and how that home compares to others.
Build a Realtor relationship
Don’t wing it by going it alone or trying to cut corners. A qualified Realtor who knows the local market is the second half of your home-buying team. “These are big, emotional purchases. You need advice and guidance,” says White-Ford. “Even if I was selling my house to my mom, I’d use a Realtor.” This expert will work with your local lender to ensure you can compete with confidence and move smoothly through the fast-paced purchase process in Colorado. Plus, a Realtor can set you up on a search that alerts you when something new pops up that fits what you are looking for.
Find a local loan officer
Because there are multiple ways to handle each home-buying scenario, having a working relationship with your loan officer can make all the difference. Interview a few and see whom you connect with. “Look for a lender who can talk through what an appraisal gap means to you or how $50,000 over asking impacts your payment,” White-Ford says. “Loan officers love what they do because they love educating homebuyers. Discuss your priorities. They’re here to find what will let you sleep well after closing.”
Get fully underwritten
Most homebuyers know about the all-important pre-approval: that stamp that shows you’re financially fit should you decide to make an offer tomorrow. But White-Ford says it’s even better to take the next step: full underwriting. “When you are fully underwritten, you only need an appraisal and can close quickly,” he says. “If you require 30 days to close and the other offer can close in 10, you are starting at a disadvantage.”
Remember, understanding the market and mortgage options are key to your success in acquiring a home in Colorado. It’s free to talk to a loan officer and you’re never bothering them, says White-Ford. “In reality, your local loan officer is dying to talk to you and can talk about mortgages all day. They are eager to bring you up to speed. So don’t be shy, call us.”
For more information, visit https://www.elevationscu.com/home-lending/mortgage
By Julie Kailus, At Home Colorado