City Creek Mortgage News

Choosing a home lender can be an intimidating process, especially for first-time buyers. However, the same hallmarks can be found with the most reliable lenders and basic research such as comparing rates is the key to finding the best possible home lender.

 

At the same time, you need to pick out a lender that can provide you with a loan to match your criteria. After all, you will be paying back this loan for many years to come and the last thing you want is a loan which is not designed to meet your future needs.

 

In this article, we consider what you should know about choosing the best home lender for you. 

 

What You Should Know Before Choosing a Home Lender 

The truth is, not all mortgage products or home lenders are created equal. Some lenders will have stricter guidelines than others, and some institutions require as little as 3% of the purchase price in terms of the down payment. What’s more, some lenders insist on an immaculate credit score, while others focus on borrowers that might not have the most impressive credit profile.

 

As for the types of mortgages, you will find six main types of mortgage with USDA loans and VA loans being the most common alternative to a conventional mortgage. Just so you know, USDA and VA loans refer to zero-down payment loans which the federal government guarantees for individuals that meet a very specific eligibility criteria. When it comes to conventional loans, most home buyers choose between an adjustable rate mortgage (ARM) and a fixed-rate mortgage.

 

Adjustable mortgages have a fixed rate at the beginning but this rate will fluctuate according to market conditions after a specified number of years. ARMs are considered riskier in this regard as some buyers may not be able to keep up with the payments when this happens. However, ARMs have a lower rate of interest in the first few years which means they are often more suitable for buyers that wish to refinance before the initial loan has reset. Meanwhile, fixed rate mortgages have a set time frame and monthly payment. While the monthly payments are higher, the loan can be paid-off much faster.

 

Either way, before you proceed with a home lender, it’s important to crunch the numbers and know the best type of mortgage to suit your circumstances.

 

5 Quick Steps to Choosing a Home Lender

You will find many institutions operating in the home lending industry but not every organization will be able to help you. For instance, Mutual Savings Banks are “thrift” institutions that focus on assisting individuals in the local community and Correspondent leaders are loan companies which rely on bigger lenders. Meanwhile, mortgage bankers package loans for specific financial companies and credit unions can also help members with sizable loans and competitive interest rates.

 

Here’s a quick guide to picking a home lender that will suit your needs:

 

  1. Know the Score – Check your credit score before you do anything. It’s important to know where you stand before approaching a home lender for advice or assistance.

 

  1. Check Registration – Check the license registry to ensure each lender is fully registered in your state.

 

  1. Compare Rates – Request quotations from as many mortgage lenders as possible and compare rates at the very least. Remember that finding the cheapest lender is not the aim but price certainly matters. Use this research as leverage to acquire a better price.

 

  1. Consult Friends/Family – It’s not a guarantee but testimonials are often helpful for finding a decent home lender. As friends and family, and check online reviews for first hand feedback.

 

  1. Ask the Right Questions – Ask as many questions as you possibly can. What is the turnaround time for approval? What commission, points or lender fees will you need to pay upon closing? Can these fees be rolled into your mortgage? What is the requirement for down payment?

 

As you can see, finding a suitable home lender is all about research. It’s best to start this process long before you even think about making any offers on a home and this will also help with speeding up the actual buying process. After that, comparing rates is the first step toward choosing the best institution and product, and taking your first steps toward owning your very own home.

To learn more about mortgage rates, call City Creek Mortgage and speak with one of our salary-based loan officers.

If you worry that rates might rise between the closing date and time of application, you might be thinking about locking the interest rate on your home loan. It’s important to pay close attention to this rate because even the smallest rise in percentage can result in thousands of dollars in interest.

That is to say, you can potentially pay less by locking your interest rate on your home loan. In fact, if you get the timing right, this interest lock might save you many thousands of dollars at the very least!

But what is a rate lock exactly?

Understanding the Rate Lock on Your Home Loan 

A rate lock refers to an option in which you can freeze the interest rate on your home loan. Your lender will essentially guarantee this rate until the end of a specific period. With a lock in place, this simply means that you also don’t need to worry about any fluctuation in the interest rate of your loan.

Interest rate locks last for up to three months or more but this is entirely dependent on your lenders conditions. It might also be free but then some lenders change a fee for this rate lock and further fees for longer periods.

Now, let’s consider the best time to lock the interest rate.

The Best Time to Lock the Interest Rate on your Home Loan 

You will almost always need to wait until the loan period is finished to request a rate lock on your home loan. For this reason, many homeowners have no option but to wait but then there’s also the risk of locking an interest rate too early. That is to say, if you request a rate lock too soon, you might miss out on an even better rate lock a short time later. At the same time, if you wait too long, you might also miss out on a more favorable rate lock in the near term.

A rate lock is usually more expensive when the period of time is longer. For example, a 60-day rate lock is more expensive than a 30-day rate lock, while a 120 day rate lock is even higher. With this in mind, it’s always a good idea to ask your lender for clarification about the rules and stipulations for a rate lock.

According to many experts, provided you are okay financially, it’s usually best to lock this rate as soon as possible. It’s a reasonably fast process but the idea for locking the rate quickly is that this is historically the best option.

Final Thoughts

Every circumstance is different but a rate lock can end up saving you thousands of dollars on your home loan. It’s also a very quick process and one that many experts insist should happen as soon as possible. At the same time, it’s best to ask your lender for clarification around the rules and when it comes to timing a rate lock, there’s really no viable way to enact perfect timing. To learn more about locking your interest rate and the pros and cons to waiting, contact a salary-based loan officer at City Creek Mortgage today.

 

Your credit score is an influential factor when it comes to taking out a loan. If you have a high credit score, you are more likely to qualify but a low credit score can leave you high and dry in a time of need.

In this article, we take a look at what you might do to improve your credit score:

 

5 Things You Can Do To Improve Your Credit Score

As you know, a credit score is a number rating that depicts your “worthiness” of gaining a line of credit. Lenders will take these numbers into account when making a decision and the following are just a few ways to improve this score before a lender sees it.

1.Pay Your Bills on Time (Every-Time)

Most people manage to pay their bills on time and this is an excellent habit from the perspective of a lender. Just so you know, a lender views this consistency as an insight to future performance and late payments are a red flag that damage your credit score. For this reason, try to make a concerted effort to pay your bills on time in the future. Whether this refers to loan repayments, telephone bills or utilities; each of these repayments can contribute to your credit score and ability to gain credit in the future.

2.Pull Credit Reports to Identify Any Weaknesses

It might seem like a scary prospect but you simply cannot fix what you do not know about. In other words, if you pull your credit report from TranUnion, Experian or Equifax, you can at least identify what you need to improve in terms of your credit score.

In case you might not know, this report can be pulled once a year and outlines any issues relating to your crest cards, bill payments or even loan enquiries.

 3. Pay Off Any Debt and Reduce Credit Card Balances

Credit utilization is something most folk do not know about. As a rule, this number is the combined balance of your credit card balances which is then divided by your credit limit. Simple enough, right? You can find this number using your credit card statements but either way, it’s essential to keep this ratio below 30% at all times. You can pay off debt and reduce your credit card balance to ensure this ratio is kept below 30%.

4. Stop Applying for Loans and Credit

Hard enquiries for loans or credit is also taken into account by your lender. That is to say, checking your credit balance is fine but making an application for a loan will be taken into account when looking for credit elsewhere. Needless to say, any rejection in this regard will be viewed as a negative sign and reason to refuse your request.

5. keeping Good account history

Believe it or not, you can improve your credit rating by keeping old accounts open with good history. A portion of your credit score is directly affected by how much time you have on each account. 

Final Thoughts

It can take many years to rebuild your credit score but the above steps are sure ways of improving this score over time. In terms of specific time-frames, this means you can potentially improve your credit score within just a matter of weeks and months. At the same time, there is no quick fix for a credit score and the best way to build an impressive score is to deploy efficient payments, positive cash flow and good habits. To learn more about your credit score and the role it plays in qualifying for a home loan, contact a salary-based loan officer at City Creek Mortgage today.

For many individuals, taking out a loan is the only way to afford a property and an interest rate is applied to this loan which acts as a cost against borrowing the money. However, this interest rate will change from one loan to the next and certain factors determine the percentage of a mortgage interest rate.

 

But how are mortgage rates calculated exactly?

 

Let’s take a look at the role of interest rates and the most common factors which determine the cost of borrowing money to pay for a property. But before we take a closer look at factors that dictate mortgage rates, it’s important to be clear on the basic role of an interest rate.

 

The Role and Intricacies of Mortgage Rates

 

It should be known that this “cost” is also insurance for the lender against the money being borrowed. In short, a mortgage interest rate is the price of the money that you might wish to borrow against the security of a property. However, this interest is a form of insurance for the lender, this also means that interest rates are non-refundable for the person borrowing the money.

 

When it comes to most home loans, this rate is paid monthly but quoted by the lender as an annual rate. For instance, an interest rate of 3% on a $200,000 mortgage will require the borrower to pay mortgage interest of $500 per month ($6,000 per year). But interest is just one of several costs as fees are also needed to cover the title insurance and “points” in the form of a percentage of the loan. What’s more, a mortgage insurance premium is required and included as part of mortgage rates.

 

You will also see an APR alongside a mortgage interest rate and this is an adjusted rate that includes the other charges cited above. It’s reasonably accurate but not exact because the APR assumes these charges are spread out over the remaining lifespan of the mortgage. Also, mortgage rates are either adjustable or fixed. Adjustable rate mortgages (ARMs) have a fixed period of between six and ten years but the rate can be adjusted over time. Meanwhile, fixed-rate mortgages have an interest rate which stays the same for the duration of the loan.

 

As for why so many fees and costs are needed, lending institutions are taking on risk when they loan money and this risk extends to both the borrower and wider economy. That is to say, you might receive a high or lower rate of interest due to your finances or circumstances but the economy as a whole is also a risk to the institution.

 

3 Main Factors that Dictate Mortgage Rates

 

Although a complex system of factors will affect mortgage rates, three factors will essentially determine how much investors might be willing to pay for shares in a mortgage-backed security – inflation, the Federal Reserve and the price of U.S Securities:

 

Rate of Inflation – Inflation is a phenomenon where prices rise across the board in the economy as a whole. Consistent inflation is a sign of a healthy economy. However, this also poses a problem for lenders as the money being borrowed today will be worth less by the time it’s being paid back. For this reason, investors will only consider high mortgage rates to make up for any loss related to inflation.

 

Federal Reserve – The Federal Reserve can make rate adjustments which indirectly impact mortgage rates. As you know, the federal funds rate is the rate which banks will use when providing loans to other banks and a rise or drop in federal interest rates will lower or higher the supply of money available.

 

Price of U.S. Treasuries – The price of U.S treasuries is also highly influential because other investment opportunities can distract investors from mortgage backed securities. In other words, investors compare these tranches of mortgages to bonds, funds and traditional stocks.

 

About Calculating the Rate of Mortgage Interest

 

A lending institution will use a specific formula to create a suitable payment schedule which accounts for paying back both the principal and interest each month. The length of a loan will also dictate how much is needed to be paid back each month. For “fully amortizing payments”, the loan is paid back in full by the end of a set term. With a fixed rate mortgage, each payment is for an equal amount but the payment will change according to the interest rate with an adjustable rate loan. When a mortgage is stretched out to thirty years, the payments are usually lower but the longer this period, the higher the overall cost.

Final Thoughts

 

For many families and first time buyers, taking out a loan is the only option when it comes to buying a property. However, this is also a realistic way to achieve safety security without risking your finances. Finally, the intricacies of the secondary mortgage market can be somewhat confusing but understanding mortgage rates is often the key to finding the best possible mortgage provider for your dream home. To learn more about mortgage rates, call City Creek Mortgage and speak to one of our salary-based loan officers. 

Refinancing can help you obtain a better interest rate and reduce the monthly payments on your mortgage. If you have a decent credit rating, refinancing is also an opportunity to move from a variable loan rate to a fixed-rate mortgage or even raise finance for an upcoming purchase. And these are just a few of the reasons you might want to refinance your mortgage in the near future.

  

Is Refinancing Your Mortgage the Right Option for You?

 

Refinancing is when the initial mortgage is paid off and a second loan is created with new terms and conditions. It’s especially enticing during times of economic or financial stress, for keeping up with mortgage payments is a challenge and refinancing can help relieve some of these persistent strains.

 

However, refinancing is not always a good idea and this is certainly true for borrowers that might have a significant amount of debt. It’s true, even if your friends or family have found “the best interest rate”, this is not an indication that refinancing is good for you, or anyone else for that matter.

 

There are also certain pitfalls that might not make refinancing a financially sound idea. For instance, stretching out payments over a longer period might reduce payments in the short term but you will still end up paying more interest on the principal later on.

 

That being said, here are some of the most common reasons why people turn to refinancing.

 

Why You Might Want to Refinance Your Mortgage

 

  1. Funding a Purchase – Some homeowners decide to refinance in order to raise money for home remodeling, while just as many use this process to pay for a child’s schooling. Instead of taking out another loan with higher interest rates, refinancing can make a lot of financial sense.

  2. Variable Rate to Fixed Rate – If you plan to stay in the home for the foreseeable future, changing from one type of loan to the other is another reason to refinance your mortgage. Proper guidance (and math) is needed for this option but this should go without saying for refinancing in general.

  3. Personal Emergency – Refinancing is sometimes the fastest way to raise money to cover a financial emergency. Now, that’s not to say you should refinance your mortgage for this reason but rather to explain how refinancing is occasionally a better option than taking out a separate loan.

  4. Consolidating Debt – You can also consolidate debt when you refinance your mortgage. Most debt comes with high interest rates which will often make refinancing a more sensible option. That being said, it’s important to deploy discipline and not waste this opportunity by generating more debt.

 

With this in mind, the overall purpose of refinancing is to provide some kind of financial benefit and careful consideration is needed to determine whether this is the best option in each circumstance. As for the process, it’s necessary to collect bank statements, pay stubs and any other documents to support a refinancing application. The lender will also require an application fee before proceeding with an appraisal and other formalities that take place when you refinance your mortgage.

 

Final Thoughts 

 

It should go without saying that your own personal finances and circumstances will dictate whether or not you should refinance your mortgage. But careful consideration is necessary and expert advice will bring peace-of-mind at the very least. After all, without the right guidance or knowledge, there is always more risk but the above reasons should tell you why refinancing can make a lot of sense.

 

If you’re considering a mortgage or refinance, or to learn about any of our home loan services, speak to the pros at City Creek Mortgage today. 

At City Creek Mortgage, we’re proud to offer quality mortgage purchase programs to a wide variety of buyers and their varying needs. Our mortgage brokers work with everyone from first-time buyers to experienced real estate flippers, plus another group that’s growing in popularity every year it seems: Potential landlords.

If you’re interested in real estate investment or are already involved in some area here, becoming a landlord may hold several benefits. Let’s look at several of the reasons why more and more people in this situation are considering renting out their properties.

Simple Financing

For starters, as long as your credit and other basic financial factors are in good shape, getting financing for a loan when you plan to become a landlord tends to be a breeze. Property rentals are considered relatively safe investments by most lenders, and the kinds of homes that are usually used for rentals are single-family homes or multi-unit apartments – both easy to finance.

Generally speaking, lenders are highly willing to offer funds to those in these situations. They know that not only will the borrower’s own finances assist with repaying the sum, but proceeds from the rental will provide another revenue source.

Profit and Equity

The simplest reason many people choose to become a landlord? To make money. If you get the math right and charge the proper amounts while providing the necessary services, you’ll turn a nice little profit each month – money you can use to pay down the mortgage, invest in other properties or several other areas.

In many cases, borrowers use this additional profit to build equity in the home. Paying down the home faster opens up several potential areas, from buying additional property to having funds in reserve for repairs or other needs.

Retirement Funding

Another long-term use of rental property funds? To begin building and adding to retirement funds. In fact, many people begin renting out properties in the years just before retirement hits, then hire a property manager when retirement age comes – allowing for continued profits even once you’re not working.

Tax Deductions

Finally, becoming a landlord comes with several potential tax benefits as well. There are several tax deductions that might be available, including interest paid on the mortgage, depreciation, repairs on the property, and even insurance premiums purchased for the rental. Several of these areas are those you wouldn’t normally be able to take advantage of in most standard mortgage situations, and there’s no addition cost for these beyond the duties you take on as a landlord (or duties you pass on to a property manager if you choose to hire one).

For more on why becoming a landlord might make sense for you, or to learn about any of our landlord-friendly mortgage programs or other mortgage services, speak to the staff at City Creek Mortgage today. 

There are a few standard pieces of documentation that are generally used when applying for a home mortgage, and one such piece is the W-2. A W-2 is a basic tax form that allows you to properly report salary and wage information to the IRS, plus contains tax withholding information and other vital data, and it’s a very common document required by lenders to get a picture of your finances while assessing your application.

At City Creek Mortgage, we’re proud to help you find the best mortgage rates no matter what your buying or application position is. What if you’re someone who owns your own business, does contracting or does not receive a W-2 for one of a few other reasons? Luckily, there are several options available for you in this case. Let’s go over everything you need to know. 

Applying Without a W-2

There are a couple important tactics to take if you’re applying for a home loan without a W-2:

  • Tax returns: In these cases, lenders will lean heavily on your tax returns to prove you’re receiving steady income. They’ll want at least two years of such returns, if not more. These returns won’t necessarily indicate the sort of monthly income lenders need to see, but they will show that you earn money and are able to pay off a loan on a yearly basis. They’ll combine this info with areas like your credit score and your debt-to-income ratio to get a good idea of your finances and creditworthiness.
  • Home loan types: It’s important to research the loan types that might be available to you, which will differ from a conventional situation. For first-time buyers, many FHA loans are available if you can provide solid tax returns and 1099s. In other cases, many states have Bank Statement loan programs that work for self-incorporated individuals, looking at monthly deposits over time rather than W-2s.

Improving Qualifying Likelihood

Some basic tips to help your chances of approval if you aren’t including a W-2 in the application:

  • 89/Pay down debt: Your credit situation and debt-to-income ratio are vital factors that become even more important without a W-2, and paying down debt helps improve them.
  • Down payment: The more you can put down up front, the less you need to borrow and the better your chances.
  • Savings: Another way to improve your debt-to-income ratio is to have a large amount of savings built up.
  • Co-signer: In some cases, a co-signer with a steady income stream will help push you over the top and receive approval from a lender.

At City Creek Mortgage, we’ll help you understand which programs you can qualify for even without a W-2. For more on this or any of our other mortgage services, speak to our staff today. 

At City Creek Mortgage, we’re proud of our reputation as a reputable mortgage company. We’ve been helping clients in Utah get the money they need for the home of their dreams for decades, and our mortgage and refinance services are second to none.

Unfortunately, like many popular industries, the mortgage world has its share of unscrupulous scammers. One popular mortgage-related scam? The down payment wire fraud. Hundreds of millions of dollars have been stolen using this fraud, and we want to help protect you from it. Here are some basics to be aware of.

How it Happens

In general, these scams will take place while you’re in the process of buying a home – the timing is important for scammers, to make it feel as real as possible. You’ll receive an email that appears to be from your actual real estate agent, telling you that instructions for wiring the down payment had changed, and giving you a new account number to send money to. A few possible red flags here:

  •     You may be asked for an incorrect down payment amount. There’s very little reason to ever pay a partial down payment, and no reason to ever pay more.
  •     The down payment is usually wired the day before closing. If they’re asking for a different date, this is suspicious.
  •     The email address will be almost your real estate agent’s, but not quite the same.

Rising Rates of Fraud

The rate of this wire fraud exploded by nearly 500 percent in 2016, and it became the 16th-highest form of reported complaint, with over 12,000 complaints that year. However, it held first place overall for total dollar losses.

How to Stop It

The simplest way: Call your real estate agent right away. Ask them if they sent that email, and if they say no, inform them that it’s likely their records have been hacked. If you happen to get tricked and fall for the scam, drop everything and call your bank immediately. From there, contact the FBI and the Federal Trade Commission, in that order.

Spotting Fakes

Most financial institutions will have a signature block at the bottom of every email and document indicating that the company will never change its wiring instructions for any reason. Anytime you get an email with money-wiring instructions and an account number, this is a red flag on its own – most institutions would never consider this form of communication for such an issue.

When you’re wiring money, ask your bank to confirm the account number and name on the receiving end just to be safe. After you’ve finished, contact your agent or the title company to verify that the money was received.

For more on spotting and avoiding down payment scams, or for any of our other mortgage services, speak to the brokers at City Creek Mortgage today.

Both today and for much of the last couple years, the real estate world has been in what most would call a “seller’s market.” This means there’s lower inventory available than there is demand across the country. This situation usually leads to rising prices and sellers who cam exert a bit more influence and leverage on the process.

That doesn’t mean you can’t get a great deal on a home, though, and we’re here to help at City Creek Mortgage. This market simply puts more emphasis than ever on making attractive offers to sellers – and this means more than just getting the financial details right. Let’s go over a few factors that will help you present a strong offer and increase your chances of acceptance.

Strong Numbers

Of course, the numbers themselves are still the strongest factor in any mortgage situation, and there are ways to set yourself apart here. A few tips:

  •       Pre-approval: This is a process where you submit your financial information and credit score to a lender, and a third party assesses your situation and gives a general range of prices you’re likely to qualify for. Pre-approval shows sellers you’re prepared in the financial area, and also strengthens your buying power.
  •       Simplicity: Wherever possible, remove contingencies and make your offer as simple as you can. Try to avoid repair demands or any other areas that will create more hassle for the seller.
  •       Amount: There isn’t much negotiation wiggle room in today’s market, but there may be times where you can squeeze a slightly larger offer than the asking price into your budget. If your realtor thinks this makes sense for you, it can be a good way to push you over the top.

Advisory Team

You want to have a few folks on your side when it comes to making offers:

  •       Loan advisor: This is where our City Creek mortgage pros can help. We’ll help you with pre-approval and several other big areas of the home buying journey.
  •       Realtor: Look for a local, experienced realtor who can help make the entire process smoother.
  •       Friends or family: If possible, look to family or close friends who have been through the process recently for some advice. They can help you with both details and overall confidence.

Personal Narratives

Some sellers will have several very similar offers to consider, so setting yourself apart might come down to a bit of a personal touch. A few options here:

  •       Perks: Offer the seller some additional perks if appropriate, such as paying typical seller fees or arranging for your own cleaning instead of asking the seller to do so. They might appreciate this more than you think.
  •       Personal note: Many sellers appreciate a personal note or letter explaining your situation and why you think the home will be a great fit for you and your family.
  •       Flexibility: In general, show sellers you’re flexible and will accommodate any unique needs they have within reason.

For more on how to make your offer stand out, or to learn about any of our mortgage loan services, speak to the pros at City Creek Mortgage today.

At City Creek Mortgage, we regularly give our clients basic information on why it often makes  more sense to own a home than to continue renting. Homeownership comes with several financial perks, even if the up-front price may seem imposing at first, and our loan advisors can help get you the best mortgage loan that will show you major financial benefits as the years go on.

One of the primary plusses here? Tax breaks, which are possible in several areas for homeowners. Let’s look at some of the major deductions you should be prioritizing when it comes to tax season if you own a home.

Interest

The primary tax benefit to think about here is deductions from any interest that you pay on your mortgage throughout the course of the year – often significant amounts. These deductions can include not only primary mortgages, but also second mortgages, home equity loans, lines of credit and even other forms of interest.

Do know that these extensions are limited here – you cannot deduct interest for a third or fourth home. But if you’re married and filing jointly, you can deduct payments up to $1 million dollars per year, or up to $500,000 per year if married and filing separately.

Points

Another form of paying interest for some people is purchasing points, which can also be used for refinancing. Both of these point formats may be tax deductible, though know that points purchased for refinancing purposes can only be deducted over the life of the loan, rather than all at once. You can write off the balance of old points at tax time, then begin to amortize the new points.

Property Taxes

You’ll pay basic city and state property taxes as a homeowner, and these can be deducted in full on your tax return. Your property taxes will show up on your escrow statement annually if you use an escrow account for these payments.

Moving Costs

In certain cases, you’ll be able to deduct moving costs from taxes at the end of the year. This is usually only possible if your move was necessitated by a job change, and you’ll have to meet a few additional requirements as well (regarding the distance from your old job to your new one and similar factors). If you qualify, however, you can deduct things like transportation costs, lodging expenses and storage fees.

Home Improvement Loans

In some situations, you might be taking out a loan to make major home improvements. In these cases, any interest paid on these loans can also be deducted – so long as the work is considered a “capital improvement.” Here’s what qualifies you for this category:

  • Adds to the value or prolongs the useful life of part of the property
  • Becomes part of the property in a way that removal would cause damage
  • Is intended as a permanent installation

For more on the kinds of tax breaks you qualify for as a homeowner, or to learn about any of our mortgage services, speak to the pros at City Creek Mortgage today.