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mortgage loan agreement

2 Important Things to Know Before Securing a Home Loan

mortgage loan agreementThe real estate market in Utah is on an uptrend. Home costs have surged over the last five years. From a median price of $190,000, it has now gone up to $280,000, far higher than the pre-recession prices of $250,000. That makes investing in a Utah property more inviting.

Getting a mortgage or refinancing an existing one is best dealt through home loans. Mortgages in Utah are not prohibitive at all, but before investing, it’s important to learn some facts about mortgage regulations and product types.

Regulations

It’s important that a borrower knows the laws and regulations that govern the industry to ensure investor protection. In Utah, the Division of Real Estate regulates the real estate, mortgage, and appraisal markets. They maintain a list of providers of mortgage loans, as well as brokers that are also depository institutions or affiliates.

There are 194 registered residential mortgage lenders and brokers in the state. You can check them on the Division of Real Estate’s website. The law that governs mortgages in the state is the Utah Mortgage Financing Regulation Act.

Mortgage types

If you’re abreast with the regulatory environment, you can now look into the type of mortgage loan to secure. Fixed-rate loans are the most common options. Their terms include thirty, twenty, fifteen, and ten years. Longer terms offer lower monthly payments. A disadvantage of this is that the annual percentage rate (APR) is higher than those of the shorter-term loans. An APR not only includes the interest rate but also broker fees and other charges.

The 30-year and 15-year fixed-rate mortgages are the most traditional of the mortgage types, but lenders also offer several adjustable rate mortgage (ARM) types. These mortgages’ interest rates float during the life of the mortgage. Often, they start at lower rates compared to fixed-rate mortgages.

Now armed with some regulatory and product type knowledge, you can start your mortgage lender hunt with ease.

Two people shaking hands over a loan agreement

Guide to Getting Approved for a Mortgage Loan

Two people shaking hands over a loan agreementThe pain and disappointment that a denied mortgage loan application can cause could be heartbreaking. It’s usually because the applicant didn’t have the right knowledge to make the right decisions.

City Creek Mortgage explains that mortgage rates in Salt Lake City are always changing. This is a very important factor in understanding your loan application. You also need to consider your income and credit score. If you’re a first-time home buyer, here are some tips on how to get your mortgage loan application approved:

1. Stay in a job that you like

Having a consistent job that provides you with a stable income is one proof that you can pay off the loan. If you don’t have a job or if you’ve been job hopping for a while, your ability to repay the loan becomes questionable.

2. Find a way to reduce your debts

This doesn’t mean you have to pay all your debts in one go, but it’ll help a lot if you kept them low. Find ways to lower car loan debt or credit card debt before applying for a mortgage loan.

3. Improve your credit score

When you lower your debt, your credit score goes higher. The higher your credit score is, the better chances you have of being approved.

4. Save up

There will always be deposits and down payments before you get the keys to your new home. Make sure you know how much you’ll need and save a little more than that amount.

If you haven’t stayed on top of your finances since day one, it may take a while for you to organize these things. If you find it too difficult, you can always get the help of a financial or mortgage advisor. If you’ve managed your finances well, then getting your mortgage loan application approved will be easier and you’ll soon be living in your new home, worry-free.

Loan-To-Value: Defining LTV in Layman’s Terms

A variety of mortgage ratesA mortgage involves plenty of complicated terms, which is why homebuyers and sellers must understand these in simpler explanations. Among all the technical jargon, LTV is one of them. Loan-to-Value or LTV is the percentage of the balance of the mortgage loan divided by home value.

For instance, a resident with a balance of USD 500,000 and USD 550,000 home value will have more or less a 90 percent LTV. You have to know this because LTV plays a crucial element to mortgage companies in Jackson, TN such as Mortgage Investors Group, as it is part of mortgage approval procedure.

Through a refinance, your LTV is usually equal to the size of the loan divided by the evaluated value of your home. When it comes to purchase, LTV relies on many factors such as the rate of sales of your house, unless your house values for below its purchase rate.

When this occurs, the LTV of your home will depend on the lesser appraised value and not its purchase rate. Here are samples to demonstrate the notion of LTV:

Refinancing a house without a second mortgage

  • Value of Home – USD 150,000
  • Balance of Loan – USD 110,000
  • Equity – USD 40,000
  • LTV – 73 percent

Refinancing a house with a second mortgage

  • Value of Home – USD 150,000
  • Balance of Loan – USD 110,000
  • Second Balance of Loan – USD 10,000
  • Equity – USD 30,000
  • LTV – 80 percent

Purchasing a house that appraises for more than its purchase rate

  • Price of House – USD 150,000
  • Value of Appraisal – USD 160,000
  • Down Payment – USD 20,000
  • Amount of Loan -USD 110,000
  • LTV – 73 percent

Purchasing a house that appraises for less than its purchase rate

  • Price of House – USD 150,000
  • Appraised Value – USD 140,000
  • Down Payment – USD 20,000
  • Amount of Loan – USD 110,000
  • LTV – 79 percent

It does not matter if you are refinancing or buying because the LTV is crucial as it helps to identify your eligibility for the loan and mortgage rate.

The Significance of Mortgage Rates in Determining Monthly Payments

House loan financingYou already know you can use a mortgage loan to borrow against, purchase or refinance any home, but, there is more to that. It is with first mortgages that you can buy a house or refinance a loan, with second mortgages allowing you to take out loans using the available equity, to add to a first mortgage.

You can also take advantage of the times when mortgage rates here in Ogden are at an optimum low to enjoy an equally lower monthly payment that you would have had you locked in the loan when mortgage rates were high.

Even a 0.25% dip can mean a whole lot of difference

Yes, you read that right. However, besides you identifying any dip from current average rate charts, it will need you to involve a credible credit union to know whether what you term as a low rate is what has been the case in the market. It is only until when you have confirmed that can you lock in that loan.

Should you notice that the mortgage rates are rising, it is advisable that you wait unless your projections for the project for which you are taking the mortgage show that unless you make the step now, the investment will not be cost-efficient.

The Other Jig of the Puzzle

Irrespective of when you take a mortgage loan, it is important you note that closing costs and loan processing fees remain a constant factor that you must take into account. These include, among others, escrow & title fees, lending, appraisal and credit fees, and insurance and taxes.

Whether you are planning to buy a (or borrow against your) Ogden home or to refinance a loan, you can benefit from understanding how the current mortgage rates can affect your monthly payment.

However, besides doing your research on that, engage a qualified financial service provider in discussing your options and determining a time that will be the most cost-efficient to take the mortgage.

Mortgage

Factors to Think of on Your Search for a Favorable Mortgage Rate

MortgageYou will most likely need a mortgage to fund your home purchase. In terms of mortgages, however, one size does not fit all. Getting a mortgage that specifically works for you is essential.

The chances are that you might be eligible for several types of home loans. Getting one with the best mortgage rates in Utah should then be your ultimate goal. Here are the essential factors that will influence your choice of an ideal rate.

Your Current Needs and Circumstances

Your acceptable mortgage rate will largely depend on the house you want and how much you can afford in down payment. Your current credit rating affects the rate your lender will offer. Borrowers with scores above 800 get lower interest rates. You could consider improving your rating before applying for a mortgage.

Your Future Plans

The monthly payments for long-term loans are typically lower. However, you ultimately pay higher interest rates over the entire loan period. Your plans influence your ideal term. If you want to finish your payments early and focus on other investments, then a short loan period is perfect. If you’re going to stay in your house for a long time, fixed-interest rates might be your perfect choice.

The Available Lenders and Loan Estimates

Get multiple options from various lenders before settling on the best one for you. This will help you comprehend your options and give you bargaining power. You should however not base your decision solely on interest rates and loan amounts. Various other charges come with mortgages. Insurance, prepayment penalties, and closing costs are some of them.

Regardless of your mortgage type, you will pay for closing costs. These costs vary among lenders. They include various taxes, insurance, and professional fees. Some lenders include these expenses in your loan while some demand for their payment upfront. Ensure you discuss and understand these costs with your lender before signing your mortgage.

Types of Mortgage Lending Institutions

A mortgage agreement needs to be signedThere are many advantages of buying your home using a mortgage rather than cash. Shopping for the right one can be overwhelming, however. Another critical factor is the mortgage lender you choose to work with.

A mortgage company is a financial institution that helps individuals secure mortgages for purchasing a property. Irrespective of the mortgage company you choose to work with in South Jordan, financial expert citycreekmortgage.com states that a loan officer will help you with the loan application process.

Here are the typical kinds of mortgage companies you can choose from for your home loan.

Retail Banks

Banks are perhaps the prevalent mortgage lenders available for home loans. These range from large banks to credit unions and small local banks. They are involved in underwriting, approving, and closing home loans for approved clients.

They typically give clients who use their other financial services lower interest rates.

Mortgage Brokers

A broker is an intermediary between homeowners and banks. They do not lend you money directly. They can shop for reasonable rates for you across lending companies and help you with the loan process. Mortgage brokers come with a wealth of experience in the home loan market.

They can offer invaluable advice and ensure you get the most suitable loan.

Mortgage Banks

These firms underwrite, consent and close loans for their clients. They then sell these underlying loans to investment firms and retail banks who bundle them into mortgage-backed securities (MBS). Larger banks can retain the servicing rights, but small mortgage banks sell the rights.

The loan agent here controls your loan process from its beginning to end.

 

If you are looking for a fast loan process, mortgage brokers might be the ideal solution for you. Though credit and retail banks offer low-interest rates for their loans, they might not provide other loan types. Keep in mind that interest rates change daily and this should not be your deciding factor.

House keys over mortgage application form

Buying a House with Cash? Consider These Factors First

House keys over mortgage application formThese days, many aspiring homeowners have various options to buy their first home. The programs offered by the government, for example, allow more people to own a house.

But some people think they should buy their homes with cash if they have the money anyway. While it also has its pros, here are three disadvantages that you should consider when buying your new home upfront.

You lose the chance to get financial help from lenders and the government

Let’s assume that your preferred property increases its market value in the next two or three decades. If you get a mortgage to buy your home, your ROI becomes higher knowing that you didn’t pay it in full in cash and you take advantage of the tax benefits you can get. If you don’t want to be tied to a mortgage for 30 years, you can have it refinanced when you get more money. You may also opt for an FHA loan program to make the process of home ownership easier. With proper planning, you can become debt-free in as little as 10 years or even less.

You’ll have to sacrifice your liquidity

For most people, it’s hard to sacrifice liquidity. If you do end up selling your property in the next few years, the process can take more time. If you buy your home in full today, it might take some time to recover what you paid for if you end up selling it.

You’ll end up putting all your eggs in one basket

If you buy your new home in cash, it’s like putting all your eggs in one basket. It has its own set of downside. Diversification is key to making your assets grow. For some people, real estate is a liability because of all the other expenses tied to it. While it is tempting to buy it in cash and not worry about monthly mortgage payments, getting a loan could be better because you’re not putting all your money in just one asset.

There are more benefits to getting a loan instead of buying your house with cash. If you’re planning to buy a house, weigh your options carefully to make the right decision.

Why it Pays to Finding the Right Mortgage Rates For You

Man showing the low mortgage rates cardBuying a home is always a huge and long-term financial investment. For most people, it is a huge milestone, so better take the time to research and plot your actions in becoming a homeowner.

One of the most important – and not always the easiest – ways to buy your home is to find the right mortgage rates and the right mortgage company.

Here are some benefits you can enjoy if you take your time to find the best mortgage rate in Utah.

Faster Approval Process

When you can find the best (which is always the lowest) mortgage rates in Utah, it will become easier for you to pay for the upfront fees and prepare the paperwork needed to finalize the agreement.

This means faster approval process because you can provide all the necessary requirements in little time. Many people would advise that you start looking for the right rates and right loan company first before you decide on the property you are getting.

Lighter Payments

Getting the lowest and best mortgage interests possible means lighter payments from your end. And when you can make the payments on time, it can be easy for you to pay in advance just to make sure you have enough covered in case of rainy days and financial challenges.

Get Out of Debt Faster

The lower the interest rates, the faster you can pay if off and start paying the principal. If you continue this setup, you can get out of debt more quickly and enjoy the fruits of your labor. Moreover, if you are done with your existing loan, you can even get a new one can finance an upgrade or buy a new property.

There are so many benefits to paying off your mortgage faster! So make sure you look for the best interests you can find!

Begin your search online and take it from there. You can also have a lending company to create a quotation for you so you can see for yourself how much you can afford. This way, you get to avoid that grand delusion that you can get the house of your dreams even if you really cannot afford it.

A Borrower’s Guide to Getting the Best Mortgage Rate

Couple signing a loan contract

The ability of a borrower to get the best interest rates on a mortgage doesn’t just depend on comparison shopping or his credit score. Lenders look at different factors when deciding if a consumer qualifies for a loan and what interest rate they should offer. Mortgage rates can vary by many percentage points based on which payments can burgeon by thousands over the lifespan of a loan.

Lenders always look at specific criteria to ensure that borrowers are well qualified for affordable interest rates.

Evaluation Criteria Used by Lenders

Credit Score

The current lending market is based on tier pricing, which means interest rates may depend on credit scores. It is important to have a score of 750+ to qualify for the best mortgage rate in Salt Lake City or elsewhere. If your credit ratings are stellar, you can get a good rate. The lowest score that a lender will consider is 620, with a down payment of at least 10%. People with poor credit scores can do a variety of things to improve their scores and qualify for better interest rates.

Stable Jobs

Lenders also look at a borrower’s work history. Being unemployed for a long period, as well declining income, won’t help an applicant’s cause. For those who are self-employed, getting a loan could be more difficult.

Income to Debt Ratio

There are two aspects to this ratio considered by lenders – the front end and the back end. The back end ratio takes all of the monthly debt payments into account and divides it by the gross income per month. The front end focuses on housing related costs. Lenders want the front end to be around 28% and the back end ratio to be about 36%. This is considered the ideal number, but lenders do offer a bit of leeway to borrowers based on their general history.

Down Payment Amount

Whether you are trying to get a loan in Salt Lake City or in Houston, the minimum down payment required by lenders is at least 20% of the purchase price of a home. Those who are able to pay 20% will get the best possible mortgage rate. Those who cannot need to shell out more toward the cost of a loan.

Once a borrower meets these criteria, the next step is to do comparison shopping. Many reliable websites provide information on mortgage tables. Shop around and get a loan that meets your needs.

Home Loan

Get Smart about Mortgages: Know Which One Best Suits You

Home LoanBecoming a home owner will bring pride and satisfaction to anyone, but there are many factors that need careful consideration, one of which is financing. Since most US citizens do not have the money to pay the entire worth of a property in one go, they need to obtain a mortgage loan.

The type of loan that will suit you best depends on a lot of things, so here’s a quick look at what your options are and when they will serve you best.

Conventional Loans

Conventional loans, offered as conforming or non-conforming mortgages, are ideal for borrowers who have attractive credit histories and maintain great FICO scores. Most borrowers who opt for this type of mortgage want to buy more expensive properties and can make the minimum required 20 percent down payment.

Consider this type of loan if you meet the qualifications, as it can save you money since most mortgage companies, such as Mortgage Waters, do not require borrowers to take out mortgage insurance.

FHA Loans

Federal Housing Administration loans best suit borrowers who have limited budget for a down payment. With this type of government-backed loan, you would only have to put a 3.5 per cent down payment on the home you want to purchase. Many home buyers opt for this type of mortgage because of the easier-to-meet requirements, plus the fact that applicants who have a not-so-great credit score are still qualified.

VA Loans

Veterans Affairs (VA) loans are a great option for those who have served in the military. Many programs even provide up to 100 percent financing, which means that a down payment is no longer necessary. As long as you have rendered at least 90 days of service during times of war or 181 days during peacetime, you can qualify for this loan. When you have served with the National Guard or Reserves, you should have at least six years to qualify for a VA loan.

Although your primary goal is to become a home owner as soon as possible, you should still tread carefully when making a selection from the options available. Consider what your future needs are, as well, as this will help you choose whether to go fixed or adjustable on your interest rate.