City Creek Mortgage News

If you’re considering buying a home for the first time, you’re probably already aware that this will be one of the single biggest financial commitments of your life. Buying a home is a big monetary step for many people, and involves a detailed process of budgeting and ensuring your finances are properly organized ahead of time.

At City Creek Mortgage, we can help you with every step along the road toward finding a great mortgage and using it to purchase the home of your dreams. This includes assisting you with all your basic budgeting and financial areas, from your future expectations to your recent history that will determine many important details, such as the mortgage rates you qualify for. With that in mind, let’s go over three important budgeting areas to assess well in advance of any mortgage or home purchase.

Budgeting Monthly

The most common budgeting format for Americans is a monthly one, and while it’s totally fine if you utilize some other method normally, you should strongly consider making a change within the realm of your mortgage. Mortgage payments are made monthly, and as these will be some of your most significant expenses, it makes sense to align your entire budgeting system this way.

In today’s modern age, making a trackable budget is simple and easy. There are numerous apps, software programs or even simple spreadsheets that allow you to track income and expenses, including detailing all the specific sources and their relevant numbers. The entire budgeting process for your mortgage will feel a lot simpler once you have a basic handle on your monthly figures and what you can or can’t afford on top of them.

Credit Report

Once you’ve set your basic budget and have a baseline for your finances, it’s time to get a copy of your credit report. This is information is collected by three major credit reporting agencies. The data is what lenders look at closely when it comes to assessing your credit worthiness.

Using your financial history, particularly your repayment of debt in a timely manner, a credit score will give a single number that reflects your overall likelihood of repaying back a loan. You can obtain your credit score for free at least once a year without dinging the score at all, so take advantage of this.

Down Payment Considerations

Finally, consider the funds you might have available to put down on a down payment. This isn’t necessarily required for every purchase, but having one can not only speed up the process but also lower your total amount of interest paid over the life of the loan. Your down payment total may also play a big role in whether or not you’re required to carry private mortgage insurance.

For more on arranging your finances ahead of a mortgage, or to learn about any of our mortgage loan services, speak to the pros at City Creek Mortgage today. 

Happy 20th Birthday City Creek Mortgage

Who would have guessed that a couple of kids who met in their teens would marry, build a business, and work together for over 20 years? Every statistic out there says it’s almost impossible—and they’re right! Some days, “hard” is a laughable understatement.

But as we look back over the last two decades at all the families we’ve helped, all of the teammates we worked alongside, all the loyal referral partnerships we have built, and at all the challenges we’ve faced, we are grateful to our core.

Your stories fuel us. Our mission is to help you build beautiful lives just as you have helped us build ours!

Saying THANK YOU for choosing us doesn’t begin to communicate our appreciation. But thank you nonetheless.

When it comes to paying down a mortgage, budgeting is a very important area for homebuyers. Failing to stay within a budget may risk missed payments or other issues that can reflect badly on their financial profile, while those who are diligent and disciplined will leave themselves in good shape – and if you go the extra mile, a mortgage can even become a fantastic financial asset.

At City Creek Mortgage, we’re here to help you buy a home that becomes a positive investment for you in the long run. One strategy for doing so? Making one extra mortgage payment each year as part of your budget. Let’s go over the various formats you can use while doing this, plus how this practice will benefit you over time.

Ways of Doing It

There are a few different ways of making an extra yearly mortgage payment:

  • Boosting each monthly payment: Take your extra payment amount, then divide it by 12. From here, just add that amount to each monthly payment – be sure to specify that this additional amount is to be applied to your principal balance, not interest.
  • Bi-weekly payments: Instead of making one monthly payment, take that same amount, divide it in half, and then pay that amount every other week instead. Over the course of the full year, this will result in you making exactly one extra payment toward your principal amount, due to the fact that most months are slightly longer than four weeks.
  • Single lump sum: Spend the year budgeting and saving up a full additional monthly payment, then determine a date when you send it in full. Again, specify that this extra payment is meant to go toward principal only.

Why Do It?

If you have the financial flexibility to use any of the methods detailed above, you should absolutely consider it. Benefits might include:

  • Generating equity: The higher a percentage of your home that you “own” (that you’ve paid off, in other words), the more equity you have in it. This means that you get more profit if you choose to sell, and equity can also be used as a way of creating additional financing for home improvement or other areas. Extra yearly payments build equity faster for you.
  • Paying less interest: As we noted above, you’ll be ensuring your additional payments go toward your principal loan balance. This will lower the amount of interest you pay, as interest is generated as a percentage of the principal amount remaining. Over the life of the loan, you can save thousands of dollars this way.
  • Paying off early: Through a single extra yearly payment, you’ll likely pay off your mortgage several years earlier than you would have otherwise. This frees you from monthly payments faster, plus as we noted, saves you interest.

For more on how making extra mortgage payments benefits you, or to learn about any of our mortgage loan services, contact the pros at City Creek Mortgage today.

As those who have been through it before can tell you, buying a home comes with a few basic processes. These processes naturally have expected time periods in which they’re completed, and while these can vary a bit within each situation, there’s a general range you can expect heading into the mortgage and homebuying process.

At City Creek Mortgage, we can do a few things when it comes to these processes while you’re buying a home. We can help familiarize you with them, for starters, but we can also offer tips on shortening certain areas for buyers who may need to close a bit faster than normal. Why might you need to close faster on a mortgage loan, and how can you go about making this happen?

Why Close Quickly?

There are actually a number of reasons why you might need to close sooner than normal if you’re a buyer. They include:

  • You’re relocating to a new city, perhaps with date requirements for a new job.
  • You have a baby or a new pet on the way and require more space in a bigger home.
  • Your first home is for sale or has already sold, and you need a second home.
  • You’re a home flipper who has identified a hot market and is looking to capitalize on it.
  • You’ve done your research on mortgage rates and expect them to rise in the near future, so are hoping to close before this happens.

Typical Process Time Periods

The general homebuying process can vary in length depending on a few factors, including the market, the home you’re looking for, and the areas you’re searching in. You can generally plan for at last a month of searching for a home, then between another 30 and 60 days for the mortgage closing process to be completed. Basically, expect a standard homebuying process involving a mortgage to take between three and four months.

Tips for Shortening the Process

This doesn’t always have to be the case, however. There are some basic things you can do to help speed up the process, including the following:

  • Pre-approval: Pre-approval is an official process where you provide your lender with significant documentation, including credit information and other important financials. You go through the underwriting process as well, and get a detailed estimate of the price range you’ll have available to you based on the mortgages you qualify for. Pre-approval allows you to both save time and bolster your initial purchase offers in many cases.
  • Great realtor: If possible, look to a local expert in a realtor who knows your area. They can help you find great homes, and also can negotiate for you.
  • Planning and flexibility: Do as much advanced planning as you can before ever starting the process. Consider the things you’re prioritizing in your search, whether this is neighborhood quality or home amenities. Prepare your paperwork in advance, plus ensure financial areas like your credit score are in good order. At the same time, be prepared to be flexible and meet the needs of your lender or underwriter quickly to help move the process along.

For more on getting a mortgage closed out quickly, or to learn about any of our mortgage services, speak to the staff at City Creek Mortgage today.

At City Creek Mortgage, we’re here to help you understand all the basics of a given mortgage loan if you’re buying a home. This is one of the biggest financial commitments you’ll make in your entire life, and you need to have a clear picture of the rates available to you and all the other important financial details.

One of the biggest questions many clients have here: What are the basics of a given mortgage payment that I’ll make each month? Let’s go over the primary financial elements of a mortgage payment, plus a few options you have in this arena.

Elements of a Payment

There are four primary elements of a mortgage payment, which is generally due on the first of each month. These elements are:

  • Principal: Principal refers to the part of your monthly payment that goes toward the actual remaining balance. As you move into later years of your mortgage, a higher and higher percentage of the principal amount will be paid off with each payment.
  • Interest: This is the fee that you’re charged by a lender for borrowing this money, a rate that’s set during your approval process. The best way to view interest is in APR (Annual Percentage Rate) format, which includes mortgage insurance and any fees that were folded in.
  • Taxes: Monthly property taxes can also be part of the mortgage payment.
  • Insurance: In many mortgages, the buyer will also have to purchase homeowners and/or private mortgage insurance.

Taxes and Insurance Options

The last two sections mentioned above, taxes and insurance, come with a few options as to how they’re paid. Here are the most common options:

  • Holding in escrow: This is a format where your lender gets your tax bills and any insurance bills, then estimates a monthly amount that will be needed to cover them. Each month, they’ll collect that as part of your mortgage payment and hold it in an escrow account, to be paid as these bills are due.
  • Self payment: A format where you actually pay taxes and insurance bills yourself, directly. These payments often aren’t monthly or on the same schedule as standard mortgage payments, though, so remember to be diligent about due dates.

For more on the basic elements of a mortgage payment, or to learn about any of our other mortgage loan services, speak to the pros at City Creek Mortgage today.

There are several important factors when it comes to getting a great mortgage for a new home or refinance, and one of the biggest is the down payment. While you obviously want to get the best mortgage rate possible, the amount you spend up front on your down payment is generally the single largest bulk spend during this process.

At City Creek Mortgage, we can help with all down payment-related areas. Unfortunately, a number of misconceptions have formed in the mortgage world surrounding down payments, and these often misinform buyers. With that in mind, let’s look to debunk a few of these down payment myths.

10 Percent Minimum Requirement

According to a study by NAR, well over half of first-time homebuyers are convinced that without a 10 percent down payment on the principal loan amount, they will be totally blocked from obtaining a mortgage for a new home. Simply put, this is false.

Average down payments for all loans today range between 5 and 10 percent of the principal total, with some programs offering down payment options as low as 3 percent. There are even some special options that come with no down payment requirement whatsoever. An assumption that you can’t get any kind of mortgage without 10 percent down could keep you from finding a lot of great home options.

Mortgage Insurance Requirement

Another related myth is that if you don’t have 20 percent to put down up front, you’ll automatically be required to purchase private mortgage insurance (PMI). But again, there are several loan programs that do not require this, including VA loans and other types – some with no PMI and others with significantly reduced rates.

Private Mortgage Insurance Myths

Another myth about PMI is that it protects the buyer, their home or a potential foreclosure situation. This isn’t the purpose of private mortgage insurance – rather, it’s to protect the lender from default on the loan. There is no foreclosure protection. Also, be sure you don’t mix up PMI with homeowner’s insurance, which is indeed for the buyer and protects your physical property.

Another big misconception with PMI is that it cannot be canceled, but this is patently untrue. PMI is only in place to protect a lender when less than 20 percent equity has been paid or built up in the home – even if you don’t put 20 percent down up front, you’ll build this level of equity at some point during the mortgage. At this point, PMI can be removed in most cases. It will be automatically cancelled when your balance reaches 78 percent of the original value, but you can request the cancelation sooner in writing if your home value has gone up enough.

For more on the down payment process, or to learn about any of our mortgage services, speak to the pros at City Creek Mortgage today.

This year, I applied and was accepted into the Goldman Sachs 10,000 small business program. It was like getting an MBA in City Creek Mortgage from Babson College, which is ranked #1 in Entrepreneurship. The $20,000 cost was completely underwritten by Goldman Sachs and is an amazing gift to any small business owner.

This 3 month (typically 1 day per week) program was the most powerful, comprehensive and valuable education I have ever received and I’m excited to launch my new growth plan next month.

To qualify you must:

    • Own your business or be the majority decision maker
    • Been in business for at least 2 years
    • Have 10 or more employees
    • Earn over 1 million per year in gross revenue

If you would like to learn more about how the GS10KSB program can help you grow your business, you can contact Contact Mike Ballif at Michael.ballif@slcc.edu or 801-957-5396. Tell him Tobi sent you and you’ll receive extra special attention. ☺ I’m also available for any questions. #ContinuousImprovement

Graduation Day abd Tobi is voted as the Goldman Sach’s valedictorian speaker for graduation. Thank you to Gretchen Figge for sweetly insisting Tobi join her in this program. 

As a bit of a contrarian, whenever things start to look too good, I begin to question the future. And given the strength of the market since the housing meltdown reversed, now is a prudent time to begin closely watching home value appreciation for any signs of a bubble.

I’m not saying I believe a correction in home values is imminent in the near term. It will happen at some point, but no one can say when with any certainty. But any time you see unsustainable growth in the housing market, you are witnessing a bubble, and as I’ve heard it said, “Whatever can’t continue must end.” I would rather consider the prospects of a housing bubble forming within the next two to four years than ignore the potential impact entirely. But I’ll let you gauge the risk yourself.

As part of the last housing crisis, indicators of our downfall began in 2005. However, consumers continued to purchase homes at a rapid pace until 2007—and even into 2008—before it was abundantly clear that we had a big problem. Had people known what to look for in 2005, many could have avoided a disaster.

I monitor five key points relative to the ongoing strength of the housing market:

  1. The median home price in relation to consumer confidence.
    • In 2006, consumer confidence hit an all-time high, and we’re at a similar point right now. Historically, when consumers feel confident, housing prices increase. However, as the recent trend in consumer confidence has not led to a relative increase in home values, we can anticipate either a drop in consumer confidence or an increase in housing prices.
  2. The number of people purchasing homes with cash.
    • When the market is hot, more people pay cash for their homes. We’ve recently seen a drop in the number of cash buyers, indicating a potential slowing in the housing market.
  3. The housing affordability index.
    • With both mortgage interest rates and home values on the rise, the housing affordability index has taken a sharp dive to a level unseen since 2009. Homes have become less affordable.
  4. The percentage of homes that increase in value month over month.
    • Although residential housing values have increased, there are many areas where prices are flat or even declining. The peak of a housing cycle is generally reached once the percentage of homes rising in value ceases to increase. The peak in our current cycle was reached in February 2017, and although this indicator could turn positive once more, it is reflective of the situation in 2005–2006.
  5. The percentage of household income that goes toward housing expenses.
    • Growth is no longer sustainable once the average percentage of household income spent on mortgage or rent payments exceeds 25%. Currently, in 20% of the major housing markets, payments average more than 25%. This is the highest percentage we have seen in a long time.

I’m not predicting a housing crash. I believe now is still a great time to buy a home, especially if you plan to live in it for a while. The relative price difference of owning versus renting overwhelmingly supports buying a home. Markets will always go through cycles. My intention is to educate and point out some of the indicators of a bubble. Maybe my thoughts will help deter buyers whose sole objective is to own a home for its appreciation value; at some point, this kind of short-term investment will no longer be an attractive option. However, the long-term reasons to buy remain firmly in place, especially with the average 4.5% growth rate on real estate. When you do the math, owning a home is a no-brainer.

We all want the best mortgage rate when we’re looking to buy a new home, and credit is one of the single largest factors here. Your credit score plays a huge role in both the kinds of mortgage programs you qualify for and the rates you can get within these programs.

At City Creek Mortgage, we’ve helped numerous clients organize their credit in smart ways to help qualify for great mortgage loan options. Here are some common mistakes that we offer tactics to help prevent:

Maxing Out

A big reporting factor in your credit score is the percentage of your available credit that’s currently in use, or your debt utilization ratio. The higher this percentage is, the lower your score will generally be. A good threshold that most experts point to here is 30 percent – you should never be using more than this percentage of your overall credit limit.

Falling Behind

Another specific event that will lower the credit score is a missed or late payment. Given the available technology today, including the ability to automate and pay bills completely online, there should be no reason why you fall behind on these payments as long as you have your finances in order.

Closing Out

Once you’ve paid down a particular credit account, it can be temping to close that account and remove an avenue toward future spending. But in reality, this will decrease your available credit, in turn increasing the percentage of debt you’re using without you even spending a single additional dollar. Rather, keep accounts open if they’ve been paid down.

Consolidating

In other cases, some people will try to move all their balances to a single card – usually one with the lowest interest rate. But this can actually lower your credit score by making it seem like that card has too high a debt ratio, and it’s generally better to keep balances spread between cards.

Too Many New Accounts

Given the above information, you may be thinking it’s wise to simply open several new credit accounts but not spend anything on them – this will raise your total available debt, after all. But credit bureaus are wise to this, and they will flag your profile and ding your score if you open too many accounts in a short period of time. You won’t get away with gaming the system here, so don’t try.

For more on avoiding mistakes with your credit score, or to learn about any of our mortgage solutions, speak to the pros at City Creek Mortgage today.

With home values climbing to record highs, many have rushed to their bank to take out a line of credit against their homes. For some it has been to make home improvements or consolidate debts. For others it was to take a vacation or purchase a car.
Recent changes have made home equity loans less favorable. For one, home equity loans no longer provide a tax deduction. Secondly, most have variable rates that are moving higher with each rate hike the Federal Reserve makes. Given new tax laws and the outlook for continued Fed rate hikes, the cost of borrowing against a home equity line of credit is increasing.
In most cases, I’m not a fan of home equity lines. If they help solve critical financial issues, they are wonderful. However, most are used to spend money that a family would otherwise not need to spend.
If you have a small balance on a line of credit, focus on paying it off as quickly as possible. Make minimum payments on your primary mortgage until the balance of the credit line is paid. Then take the amount your budget is used to paying and apply that as a principal reduction to your mortgage. That will help you pay off your home faster.
If you have a large home equity line balance, consider at what point it makes sense to consolidate that into your primary mortgage. The blended rate of a home equity loan and your current mortgage is often higher than the current rates to refinance. If you need help determining what is best, we are here for you.