Vectra Bank mortgage loan officer Carolyn Meadowcroft
Buying a home can be a stressful event regardless of a person’s income, but two upcoming seminars aim to help community members learn a little bit more about the banking side of the process.
As part of the Happy Home Seminar Series — a new, free event series hosted by the Glenwood Springs Post Independent and sponsors — Vectra Bank mortgage loan officers Carolyn Meadowcroft and Nathan Phillips will be visiting Rifle and Glenwood to provide informal, educational presentations about two specific loans the bank offers.*
“This is important across the Western Slope where we have a lot of individual, special communities,” Phillips said. “It requires having a bank that is going to think outside the box and work toward creative solutions to get people into homes.”
Here are the two loans that Meadowcroft and Phillips will share more details about at the events.
One-time close
The one-time close loan at Vectra Bank is a construction loan and permanent mortgage in one loan, with a closing that happens at the same time.
While this type of loan isn’t totally unique, she said the Vectra version does have some benefits that others do not. One is that the interest rate on the construction loan is the same as it is for the mortgage. Because it is a portfolio loan, it’s an adjustable rate mortgage, meaning the interest rate is fixed for an initial period and then adjusts annually or as specified thereafter. According to Meadowcroft, interest rates can often be as much as 1 percent less than you might find with traditional financing. The loan may also cover up to 90 percent of the cost of construction, whereas other similar loans often only cover up to 80 percent.
“The Roaring Fork Valley has a lot of home buyers who scrape old homes and build something brand new,” Phillips said. “Because it’s so common, the bank has a process in place to review construction plans and specifications to help borrowers determine if the loan amount is over- or- underestimating the total cost.”
“We have a two-pronged approval process: We approve the borrower on the credit side, and the construction approval process looks at the plans and specs from the builder,” Phillips said. “We typically have at least a 5 percent contingency built into the loan.”
Because the mortgage is closed before construction, there isn’t the ability to come back and increase the loan amount should the project run into cost overruns. Because of this, Meadowcroft said Vectra Bank encourages home buyers to ask for a fixed bid or guaranteed price from builders.
Vectra Bank mortgage loan officer Nathan Phillips
CRA loan
Vectra Bank’s CRA program is a loan that meets U.S. Department of Housing and Urban Development’s Community Reinvestment Act (CRA) guidelines. The mortgage program offers lower down payment options and is intended to help those within a low to moderate income bracket qualify for a home loan. The program is often used for first-time home buyers although that isn’t a requirement.
Vectra Bank has been offering its new CRA loan since January 2019. The CRA loan requires as little as a 3 percent down payment and offers a slightly lower interest rate than what you’d get with a conventional loan. Another benefit of the program is that the lender, not the buyer, pays the private mortgage insurance premium.
“That can make a big difference when someone is qualifying for a loan,” Meadowcroft said.
The program does have income limits, but it’s not a one-size-fits-all amount because the bank uses a formula based on the location of the home. But for those who do qualify, the mortgage payment can be lower thanks to associated benefits of the program.
“That’s a big deal in our valley with higher sales prices,” she said.
Meadowcroft said the CRA program fits in with a lot of other loan programs geared toward first-time home buyers — such as FHA, CFHA, USDA and others — but the CRA loan in particular typically allows people to qualify for a higher loan amount due to the lower interest rate.
“The CRA loan is a great alternative for qualified borrowers. In the event the potential borrower may not meet the CRA qualification requirements, we can show them other potential options we have,” Meadowcroft said. “It does require that you take a homebuyer education class, but we encourage our borrowers to take those homebuyer classes anyway.”