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Mortgage Term Glossary for Aspen Homebuyers

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Mortgage Term Glossary for Aspen Homebuyers - Buy a Home in Aspen, CO

If you’ve never bought a home before, you’re going to be introduced to the world of mortgage lingo – and some of it is downright confusing.

Before you begin shopping for the best rates on loans, have a peek at this mortgage term glossary.

Mortgage Term Glossary for Aspen Homebuyers

Adujstable-Rate Mortgage

An adjustable-rate mortgage is a loan that has an initial fixed-rate period. After that period expires, your rate may change up to once a year; it could go up, or it could go down.

Amortization

Amortization is the term lenders use to refer to the reduction of debt over the term of the loan. When you pay down the principal – the actual amount you borrowed – you’re amortizing.

Appraisal

An appraisal is simply a written estimate of a property’s value.

Closing Costs

Closing costs are the expenses you’ll incur to buy the home, but they don’t include the home’s sale price.

Deed

A deed is a legal document that transfers ownership rights to a property.

Earnest Money

Your earnest money is the cash you put down on a home to show the seller that you’re really going to buy it. When you close on the home, the earnest money you put down goes toward how much you owe the lender.

Fixed-Rate Mortgage

A fixed-rate mortgage is one of the most common types of mortgages. The interest rate doesn’t change over the term of the loan (a 30-year loan will have the same interest rate in 30 years as it did when you opened it, no matter what the market does).

Points/Discount Points

Points, sometimes called discount points, are fees that you pay your lender at closing to lower your interest rate. For example, if you’re approved to buy a home with a 5 percent interest rate, you may be able to pay points to decrease it to 4.5 percent (or lower). Typically, one point equals one percent of your loan amount.

Principal

The principal is the balance you owe on your loan, not counting the interest.

Private Mortgage Insurance

Commonly called PMI, private mortgage insurance is the insurance you’ll have to buy if you’re putting down less than 20 percent of the home’s purchase price.

Title Search

A title search is a search for liens and other encumbrances that could affect your ownership of the home after you buy it.

Underwriting

Underwriters are the people who determine what risks are associated with giving you a loan. They’re the ones who come up with the terms and conditions of loans; they evaluate each loan on a case-by-case basis.

Are You Buying a Home in Aspen?

We’d love to help you find the perfect home for sale in Aspen.

If you’re thinking of moving to Aspen or any of the surrounding communities, we’d love to help you find your dream home. Give us a call at 970-429-8275 or get in touch with us online. If you’re selling, get your free Aspen real estate market update and find out how we can sell your home quickly and at the best price.

While you’re here you can also browse our:

 

What is a Mortgage Buydown?

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What is a Mortgage Buydown - Aspen Homes for Sale

If you’re thinking about buying a home in Aspen, you need to plan for the future, too—and that means getting to know different types of financing options and determining what could work in your favor.

If you haven’t heard of a mortgage buydown, now is the time to become familiar with it; it’s a technique used by many savvy investors and homeowners.

What is a Mortgage Buydown?

A mortgage buydown is a way to pay off your mortgage loan and watch the total balance become smaller with each payment. A smaller mortgage balance indicates that your equity is growing, even if your home is appreciating in value very slowly (or barely at all).

Features of a Mortgage Buydown

A mortgage buydown is simple and straightforward. It works because the payments are reduced, and they’re calculated with a lower interest rate over a specific period of time.

It’s a bit like a subsidy in that you’re putting away a certain amount of money and using part of it each month to help pay your mortgage payment.

Could a Mortgage Buydown Work for You?

Talk to your lender to find out whether a mortgage buydown could be fiscally favorable for you.

Are You Moving to Aspen?

If you’re thinking about moving to Aspen, we’d love to help you find your next home.

Call us at 970-429-8275 or contact us online to tell us what you’re looking for so we can begin searching right away.

Hot Aspen Homes for Sale

Use the links below to find homes for sale in Aspen that meet your needs.

 

From Renter to Buyer: Are You Ready?

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cost of homeownership - aspen homes for sale

If you’re currently renting your home but you’re ready to make the transition to official homeowner, congratulations!

However, there are a few things you need to know before you kiss your apartment goodbye and replace it with a single-family home of your own.

How Much Does it Really Cost to Own a Home?

In addition to your mortgage loan (and the one-time earnest money deposit you’ll need to put down before your mortgage even begins), you’ll have to shell out for certain expenses each month… and this is all after you find a home you love and you’ve taken all the steps you need to take to ensure that you’re buying the right place.

The actual costs of homeownership include:

  • You’ll have to pay property taxes based on the county in which you live.
  • Homeowner’s insurance. You’ll pay insurance premiums to the insurance company of your choice; this type of insurance is typically required by lenders, because it protects their investment in your home.
  • Homeowners association dues. If your new neighborhood has a homeowners association, or HOA, you’ll more than likely have to pay HOA dues or fees each month. Each HOA is different, and you’ll find them in subdivisions, neighborhoods, and condo complexes.

What Can You Do to Financially Prepare for Homeownership?

Aside from saving up 20 percent of your new home’s purchase price as a down payment (unless you’re using a VA loan or some types of FHA loans), you can begin working on your credit score now. The higher your score, the better interest rates you’ll get—and the more likely lenders are to work with you.

Are You Buying or Selling a Home in Aspen?

Call us at 970-429-8275 or get in touch with us online to tell us what you want from your next home. We’ll begin searching Aspen real estate listings right away. If you’re selling, get your free Aspen real estate market update and find out how we can help you sell your home quickly and at the best price.

While you’re here, you can also browse our:

 

What is an Adjustable-Rate Mortgage?

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Navigating the world of lending—particularly home lending—is tough (and it’s often confusing, too).

Nonetheless, if you’re like most people, you’ll have to take out a mortgage loan to pay for your new home in Aspen, Basalt, Carbondale or the surrounding communities.

And that means you’ll hear all kinds of financing lingo; you may even be offered an adjustable-rate mortgage, or ARM, when you apply for a loan.

So what is an adjustable-rate mortgage, and how can you tell if it’s right for you?

What is an Adjustable-Rate Mortgage, or ARM?

An adjustable-rate mortgage is a loan featuring monthly payments that can fluctuate as interest rates change.

It sounds simple, doesn’t it?

There’s more to it than that.

Most ARMs have an initial fixed-rate period. During that time, your interest rate won’t change. Typically, after that fixed-rate period, you’ll have a longer period during which the rate changes at certain intervals.

Pros and Cons of Adjustable-Rate Mortgages

Everyone has his or her own reasons for choosing the type of loan they end up using—and it’s extremely important that you go to your financial adviser if you’re not sure what’s right for you.

You’ll have to weigh the pros and cons of adjustable-rate mortgages on your own, or with the help of a professional who works for you (rather than for your lender) to determine what’s best. We can provide you with information so you can make the best possible decision, so here’s what you need to know:

  • The initial interest rate is often lower with an adjustable-rate mortgage than it is with a comparable fixed-rate mortgage.
  • After your fixed-rate period ends, your monthly payments can go up if interest rates rise.
  • After your fixed-rate period ends, your monthly payments can go down if interest rates go down.
  • Interest rates are unpredictable; that means you don’t know what your mortgage payment will be in a year, in 10 years, or in 29-and-a-half years, when the house is nearly paid off.

There are several types of ARMs, including 3/1, 5/1, 7/1, and 10/1. In each of those, the first number refers to the duration of the introductory rate (so in a 3/1 ARM, your introductory rate would last for one year). The second number refers to how often the interest rates can change, in years (so in a 3/1 ARM, your interest rate could change every one year).

Are You Buying or Selling a Home in Aspen?

Call us at 970-429-8275 or get in touch with us online to tell us what you want from your next home. We’ll begin searching Aspen real estate listings right away. If you’re selling, get your free Aspen real estate market update and find out how we can help you sell your home quickly and at the best price.

While you’re here, you can also browse our:

 

4 Things You Need to Know About Mortgage Loans

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4-things-you-need-to-know-about-mortgage-loans-buy-a-home-aspen-co

If you’re like most people, you’ll need to take out a mortgage loan to purchase a home in Aspen.

But how much do you really know about mortgage loans? Could you define the standard terms that lenders use, and do you know the ins and outs of borrowing?

4 Things You Need to Know About Mortgage Loans

When it comes to mortgage loans, it’s tough to keep tabs on what’s what—laws change, and so do many lenders’ practices over time.

Some things stay the same, though, so it’s a good idea to gather as much knowledge as you can so you’re an informed consumer when you buy your next home.

  1. Know the “lingo.”

  • Loan amount: how much you borrow.
  • Mortgage rate: how much you pay in interest.
  • Term: the number of years it takes to repay a mortgage loan.
  • Locking: the term used by lenders when they guarantee you a certain interest rate.
  • Closing costs: lender fees and amounts of money you must pay to others when you purchase your home.

  1. Mortgage rates change quickly.

Mortgage rates are low right now, but there’s always some fluctuation. A rate you hear in the morning may not even be the same that afternoon.

  1. Lenders are all different.

All lenders charge different rates and fees. There are no regulations that require different lenders to offer the same interest rates (there are plenty of other laws governing them, though), so what one bank offers you, another may balk at.

  1. You can still get a loan with a low down payment.

If you’re using a VA loan, you don’t need a down payment at all. If you’re using a certain type of FHA loan, you probably won’t need 20 percent of the home’s selling price as a down payment. The point is that low-down-payment loans are still available, and if you need to find a lender who can help you, just ask us; we’ll point you in the right direction.

Are You Buying a Home in Aspen?

Call us at 970-429-8275 or get in touch with us online to tell us what you want from your next home. We’ll begin searching Aspen real estate listings right away.

While you’re here, you can also browse our:

 

What You Need to Know About Earnest Money

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what you need to know about earnest money - aspen homes for sale

When you purchase a home, there’s a certain “order of operations” that you go through. Once you make an offer and the seller has accepted it, it’s time to put down earnest money.

But what is earnest money, and what does it have to do with escrow—and what else do you need to know about it?

What is Earnest Money?

Like the name implies, earnest money is money that you put down to show that you’re serious about purchasing a home. It’s a good faith gesture, and the money is held in escrow until you close. At that point, your earnest money deposit is applied to the balance of your down payment.

Naturally, as with just about everything else in a home purchase, the amount of money you put down as an earnest money deposit is negotiable. However, if you put in an amount that is significantly lower than what would be considered customary, the seller might not be very pleased.

What to Know Before Putting Down an Earnest Money Deposit

Before you put money down, make sure you know the property and you have discussed your intentions with your Realtor®. It’s a good idea to have the home thoroughly inspected before you hand over an escrow deposit—and that you talk to your Realtor about contingencies that will get you your deposit back if something terrible comes out of the inspection.

In most cases, it’s best to have a contingency that ensures you get your deposit back if the property appraises for less than the purchase price or if something falls through with your funding, too.

You’ll also need to review all the property disclosures with your Realtor before you get serious about purchasing any home.

Are You Buying a Home in Aspen?

Call us at 970-429-8275 or get in touch with us online to tell us what you want from your next home. We’ll begin searching Aspen real estate listings right away.

While you’re here, you can also browse our:

 

 

Prequalification vs. Preapproval

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Prequalification vs Preapproval - buy a home in aspen

Prequalification and preapproval are two very different things – but if you’re buying a home, you need to know which is better and what will help you most, particularly if you are a first time buyer.

What is Prequalification?

During the prequalification process, you’ll find out how much a lender may be willing to let you borrow.

You won’t have to go through a credit check during prequalification. You’ll just need to discuss your current financial circumstances with a lender, including your assets, your income and your debt. Once you’ve given the lender an overview of your financial circumstances, they’ll tell you approximately how much money you may qualify to borrow if your circumstances do not change.

What is Preapproval?

Loan preapproval is different from prequalification in that you must verify your financial circumstances with the lender. You’ll go through a credit check, and you will be asked to bring in pay stubs, tax returns, and other documentation that helps a lender verify that you are telling the truth about your financial circumstances.

The lender will preapprove you for a specific amount of money, and as long as your financial circumstances do not change by the time you officially accept the terms of the loan, it’s safe to assume that you’ll qualify for the same amount when you’re ready to buy.

Which is Better?

Sellers can take your offer more seriously if a lender has preapproved you. A preapproval shows sellers that you actually qualify to buy the home, and it can give you an edge when other people are also making offers.

Are You Buying a Home in Aspen or the Surrounding Communities?

If you’re buying your first home in Aspen or the surrounding communities, we can help. Call us at 970-429-8275 or get in touch with us online to tell us what you need so we can begin searching right away.

Explore:

 

River frontage on the Arkansas River. The main house has 4 bedrooms and 3 full and one 3/4 bathroom with a two car garage. The caretaker house has 3 bedrooms and 2 baths, large garage, decks and additional storage.The main barn has a hay loft, cement flooring and workshop. Additional livestock barn with fenced paddock for horses. Produces great hay and privacy to enjoy ranch lifestyle. $3,500,000 Active

15760 Co Rd 220 Salida, Colorado

4 Beds 4 Baths 3,819 SqFt 81 Acres

A newly-renovated condo in the core of Aspen that leaves nothing to do but come and enjoy it. In town location, excellent rental income, new furnishings and an Aspen view. New wood floors, brand new furniture and finishes throughout. On-site amenities include a pool and hot tub, sauna and fitness room and grills. All just a couple blocks from the Silver Queen gondola on world famous Aspen Mountain! $2,500,000 Active

747 Galena Street S 280 Aspen, Colorado

3 Beds 3 Baths 1,082 SqFt

A ranch with so much to offer. A quaint main house and two cabins and a large finished barn. The main house boasts 4 bedrooms and 2 bathrooms. The first cabin has 2 bd and 1 bath. The second is a studio cabin. One of the most impressive things about this property is the 3,000 square foot barn with finished bath and cement floors. Includes a new irrigation system. Bring every toy you could possibly imagine and all your friends, family and pets to enjoy this incredible ranch! $1,700,000 Active

8509 Co Rd 250 Salida, Colorado

3 Beds 2 Baths 2,558 SqFt 74.050 Acres

An investor or remodelers dream! This clean slate offers any buyer an opportunity to create the Aspen condo of their dreams just a few short steps from Lift One on world famous Aspen Mountain Two-bedrooms, two bathrooms, outside patio area, generous living space with wood burning fireplace, washer/dryer; this condo has great ''bones'' for any would-be buyer. Underground parking and storage in the garage. $1,495,000 Active

700 Monarch Street 104 Aspen, Colorado

2 Beds 2 Baths 1,014 SqFt

 

Aspen Premier Properties


office@aspenpremierproperties.com
400 East Main Street, Aspen, CO 81611
Office: 970-429-8275
Fax: 970-429-8172

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