APRIL 3, 2025 | FEATURES | By Grace Bean (Staff Writer)
As a majority of Colorado College students move their way up the residential ladder to eventually live off campus during their senior year, it seems vital that they know how to sublet, sign a lease, pay rent and understand the nuances of a mortgage.
Let’s solidify our tumultuous relationship with housing at Colorado College by understanding how things work.
What’s a mortgage?
A mortgage is a type of loan from the bank, specifically designed for purchasing real estate, such as a house or condo.
A mortgage is a loan borrowed from a lender – such as a bank or credit union – to cover the cost of real estate.
Mortgages have an agreed repayment schedule that includes interest over a set period of years (it could be 15, 20, 30, etc.) through regular monthly payments.
An important factor with this kind of loan is that whatever kind of property you purchase with the loan becomes the collateral if you fail to make payments to pay back the lender the money they gave you to initially purchase the property.
You must make your monthly payments and take into consideration the interest rate when applying for a mortgage loan; everyone should understand how you finance the loan to be paid over time.
If interest rates are high, this would discourage you from taking out a loan – paying back the loan would include a high percentage of interest you have to pay the lender on top of paying back the loan.
If interest rates are low, borrowers are encouraged to take out a mortgage because the additional percentage of the loan paid back to the bank is small.
Before you start looking for a property to buy, it’s recommended to get pre-approved for a mortgage. This helps you establish a realistic budget and strengthens your offer when you find a property.
Once your mortgage application has been approved, you can proceed to the closing stage. Not that anyone at CC is looking to buy a home, but understanding the importance of making your monthly payments is similar to paying off your student loans.
The collateral is the home – if you are late on your regular payments, the bank will seize the property.
If you do not make your student loan payments, you are the collateral.
You could face late fees, credit score damage and possibly deductions from your paycheck. The more behind you are on a payment, the more severe the financial consequences. Additionally, you lose eligibility for additional federal student aid and loans, and it could take you years to reestablish a good credit record.
What is a credit score? How do I get a credit card?
We will tackle this topic next week, but in short, this is a three-digit number that determines your credit risk based on information in your credit report.
The higher the score, the lower the risk you have as a borrower, which means you’ll have an easier time with approvals for credit cards and loans, lower interest rates on loans along with high loan amounts.
Tune in next week to learn about credit cards, debt and insurance!