Vail Daily column: Loan options for local buyers
Ever since Vail opened in 1962, it seems there has been a shortage of available housing for local employees. Few know that where the Potato Patch Club sits there once was a mobile home park housing some of the first individuals who personified the genre of ski bums. Indeed some of Vail’s more respectable and successful residents today once resided there.
But most people ultimately want to own a home, and combining that dream with owning a home in Eagle County can be daunting. The primary challenge being the price of housing and getting a down payment saved up, and the challenge of qualifying for a mortgage if one holds several seasonal or part time jobs throughout the year.
But fear not prospective home buyer, others have gone before you and figured it out. Getting there might mean taking life more seriously for a year or two first, but it often can be accomplished.
There really are many options that might help. Buyers do have to have verifiable income and enough of it (that means you might have to report your cash tips for a few years), but if you work the same seasonal jobs for two years, or do the same type of work, then we can often piece together the income stream side of things. If you work as a river guide one summer and a golf starter the next year, then you won’t be able to count that part of your income, though. Lenders like consistency in career paths, even for river guides or golf starters, so you will need to stick with the same line of work consistently.
Buyers also have to have at least decent credit, and generally no open collections or charge off accounts in the past few years. You should check your credit report at least once a year with all three bureaus to make sure there is no incorrect information there. A good way to improve your credit score is to pay down your accounts to less than 40 percent of your credit limit, and pay more on newer accounts. A new account that is a few months old and maxed out will lower your credit score more than an older account with the same balance. We often work with buyers a year or more before they are ready to buy advising them on how to get a good credit score.
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In terms of down payment, 5 percent of the purchase price is a good goal but you might be able to get by with less. There is one program you might qualify for that will fund 100 percent of the purchase price. This program has some pretty sticky restrictions and is about the only program you can be disqualified for if you make too much money. Another popular program will work with 3 percent down, but not on a condo purchase (the property would have to be a single family or townhome or duplex).
Another option for veterans is a VA loan. These can go to 100 percent loan-to-value and don’t have any income caps. There are some ins and outs of qualifying, though, but I’m told it’s easier to buy a house with a VA loan than it is to get a doctor’s appointment at the VA hospital most days.
There are also some loan programs from Eagle County that might help you with a low interest down payment loan, but these are not for everyone and take some careful thought to see if it is the right fit even if you do qualify.
Today’s interest rates also make it easier to qualify than in the past (and likely in the future if rates go up). The principal and interest payment on a $300,000 loan at 3.875 percent is $1,410 per month. That same loan at 6 percent interest is $1,798 per month. It would take about $10,000 more income to qualify at 6 percent than 3 percent.
Chris Neuswanger is a mortgage loan originator with Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage related inquires from local readers. His blog and a collection of his columns can be found at http://www.mtnmortgageguy.com.