City Creek Mortgage News

Within a mortgage or home buying situation, there are a couple types of insurance that may come up. One of these is mortgage insurance, also called private mortgage insurance (PMI).

At City Creek Mortgage, we’re happy to explain the ins and outs of mortgage insurance wherever it applies, from conventional mortgages to FHA loans and many other programs we offer. How does it differ from other insurance types that you might have to think about? How is it paid? Does it benefit you? We’ll answer all those questions here for you.

Difference Between Mortgage and Homeowner’s Insurance

It’s important to differentiate between private mortgage insurance and homeowner’s insurance, which are entirely different things. The former is mostly to safeguard the lender, while the latter is for the benefit and protection of the borrower.

As the name suggests, homeowner’s insurance is for the buyer – to protect their essential belongings and the home itself from burglary, natural disaster and other potential issues. Private mortgage insurance, on the other hand, is a form of insurance paid by the buyer that protects the lender in case of default, typically used in loan situations in exchange for a smaller down payment or allowance of purchase with a lower credit score.

In essence, think of PMI as the balancing factor for you getting a better deal. Your lender is helping you out by allowing a lower down payment or approving you with a lower credit score – in turn, you’re offering them protection by paying private mortgage insurance (until you own enough equity in the home, which we’ll discuss below).

 

Payment Formats for Mortgage Insurance

There are several ways mortgage insurance might be paid, whether to a private mortgage insurance company or to a government agency like the FHA or VA:

  • Monthly: The most common format, monthly PMI payments come with no upfront premium, and are generally lumped in with the overall mortgage payment and paid all at once. They offer plenty of flexibility.
  • Single: Some buyers choose a single PMI payment, which can be either refundable or nonrefundable. This amount will sometimes be financed into the loan amount, but may also be kept separate. This option does involve an upfront premium.
  • Split: Some portion is paid up front, plus a premium, but a lower monthly renewal amount is then also paid.
  • Outside party: In some special circumstances, the lender or a separate third party will pay PMI.

Canceling Mortgage Insurance

As we noted above, PMI is in place to protect the lender against default. But as you pay down more and more of the mortgage, therefore building your equity in the home, the risk of default to the lender goes down – and as such, you can cancel PMI partway into nearly all mortgage situations.

In nearly all cases, you can request a cancellation of PMI once you’ve got the mortgage balance down to 80 percent of the home’s original value. The lender doesn’t necessarily have to approve this request, but once the balance drops to 78 percent instead, it’s an absolute requirement that PMI be cancelled. There are also additional situations where PMI must be cancelled after new appraisals, mostly based on loan-to-value ratios.

For more on private mortgage insurance, or to learn about any of our mortgage loan services, speak to the staff at City Creek Mortgage today. 

 

If you spend enough time speaking to folks about the home market and mortgages, chances are you’ll hear references to various “buying seasons.” We all like to get a great deal, and there are certain factors at various points in a given calendar year that may make these periods more or less attractive depending on your needs.

At City Creek Mortgage, we have a huge variety of great mortgage rates regardless of the time of year. Let’s go over some of the traditional benefits and drawbacks of considering a home purchase during each of the major seasonal areas – spring and summer are generally lumped together, while fall and winter also are grouped as one.

Spring and Summer

Spring and summer are generally considered the “busy” season for the real estate market. More homes are listed and sold during these seasons than during the other half of the year, meaning more options available. Some of the additional benefits of hitting the market during this part of the year include:

  • Higher inventory: As we just noted, more homes available means a greater number of options to choose from. The majority of sellers list their properties in spring, and those that linger on the market a bit longer remain during summer.
  • End-of-summer discounts: Down similar lines, homes that remain on the market all the way through the summer may see a small dip in price by the time you reach August and September, and you might be able to get a good deal.
  • Family considerations: The summer is the ideal time to move for many families – kids aren’t in school and there aren’t as many scheduling items to worry about.
  • Selling old home: If you’re selling an old home and buying a new one, the spring and summer will feature more buyers for the old one.

At the same time, there are some downsides of buying during this season:

  • Competition: More homes available also means more buyers and offers on the table.
  • Pricing: Sellers recognize that this is the busier season, and may price their homes accordingly.
  • Time to consider: Homes will move faster during the spring and summer, so you’ll have less time to sit on decisions.
  • Realtor availability: Realtors will also be busier and less able to devote time to you.

Fall and Winter

Fall and winter, on the flip side, are slower seasons in general for home sales – but they do still take place, of course. Some positives of buying during this period:

  • Deals: Prices are often lower, and more motivated sellers may be more willing to negotiate.
  • Competition: There won’t be as many buyers on the market.
  • Cold weather open houses: Visiting during the cold months gives you a better idea of how the home handles the more stressful season from a maintenance and expense standpoint.

There are also some cons to the fall and winter:

  • Inventory: There are fewer homes available, as many listings are removed by the holiday season if they don’t sell before then.
  • Weather: Both searching for homes and moving may be more difficult in winter weather.
  • Holidays: Both sellers and realtors are busier during the holidays, and may not be as available.

For more on choosing which season to buy a home in, or to learn about any of our mortgage loan services, contact the pros at City Creek Mortgage today.

Improving Home Equity – Tips and Benefits, Part 2

In part one of this two-part blog, we went over some of the basics of what home equity means and how you can begin to build it. Equity is a vital area to understand for anyone purchasing a home with a mortgage, as it can have a big impact on your future finances.

At City Creek Mortgage, we can help you understand how equity works for any of our emortgage loan programs from conventional options to FHA, VA and others. Let’s look at a few other areas where you can raise or otherwise bolster your equity as you pay down your mortgage over the years.

Retaining Equity

As we touched on in part one, a common use of equity for some is what’s called a cash-out refinance – this is where you leverage the equity you’ve built up over time to take a new mortgage where you pay the same amount, but receive a cash payment that represents this equity.

And while this format may indeed be the right route to take in some situations, it has been badly misused by some. During the housing crash of the late 2000s, so many people attempted this form of refinancing that equity began to go the other way, not providing the same benefits. Many would refinance over and over again anytime they built a little equity, which sucked theirs dry long-term. If you choose to keep your equity in your home, it will be retained and can be used in the future.

Making Smart Home Improvements

The name of the game when it comes to home improvements and equity is return on investment, or ROI. You want the kinds of improvements that impact home value at a greater level than the cost they bring – kitchens and bathrooms are the most common areas here, with stainless steel and stones like quartz always popular. If you’re able to take things a step further and install certain upgrades yourself, you can save the cost of hiring contractors and build equity even further.

Rental Options

Another way to build equity is renting part or all of the property to tenants. There are plenty of fair rental situations that benefit everyone, allowing the renter a great place to live while helping you build equity through their monthly rent.

Down Payment Size

One area you can consider at the very beginning of your mortgage if you want to start out on a good foot equity-wise is making a larger down payment. A down payment is absolutely part of your immediate equity gained in the home – the higher it is, the lower your loan-to-value ratio, the lower your interest rates might be, and your equity will both begin higher and rise faster.

Maintenance and Home Presentation

Home equity grows as your home value increases, so keeping your property in great shape is a good idea here. This is particularly important if you’re considering selling soon, though home values can fluctuate based on appearance even during stages where you aren’t actively looking to sell.

For more on how to raise your equity in your home, or to learn about any of our mortgage rates or loan options, speak to the staff at City Creek Mortgage today. 

Within the world of mortgages and home-buying, the term “equity” is a common buzzword. There are literally trillions of dollars in equity in mortgaged properties out there, and there have been various trends through the years in terms of the popular ways borrowers used the equity they built up.

At City Creek Mortgage, we know that particularly for first-time homebuyers, terms like these may seem foreign or intimidating when buying a home. This two-part blog will go over what equity means, how it benefits you, and several tips for helping you raise your equity over time to accomplish major financial goals that it might assist with.

Equity Basics and Importance

Simply put, equity refers to the value of the homeowner’s interest in the home – basically, the current value of the property minus any liens attached to it. Equity you have in your home goes up little by little over the course of a mortgage as you pay down the balance and “own” larger percentages of the property.

As equity builds up, it can be used in a few different ways. Prior to the housing crisis a decade ago, many were using strong equity to cash out and get a line of credit or a beneficial refinance, and there are still many who can benefit from similar areas when they’ve built up enough equity.

Our upcoming sections will detail several ways you can build equity in your home, starting with some of the simplest.

Simple Passage of Time and Mortgage Payments

As we touched on above, you begin building equity in your home as soon as you make a down payment and begin paying the balance monthly. Each payment increases the percentage of the property you actually own, which in turn raises your equity.

Simultaneously, market rates may increase your equity without you lifting a finger. If you buy a home for $200,000 and its value rises to $250,000 within the first few years, this additional $50,000 is represented as equity to you (on top of payments you’ve made, of course). Keep in mind, though, that market values can go the other way and actually hurt equity in some cases.

Making Larger Payments

One simple way to increase your equity if you have the financial flexibility is to make larger mortgage payments each month. Put the additional portion toward the principal amount each time, rather than the interest, and this will help you gain equity faster.

Making Additional Payments

Down similar lines, you might consider paying the same amount, only more often. One common tactic here is paying biweekly rather than paying monthly – you’ll make 26 payments over the course of a full year rather than 24, building a little equity even as the additional amount you pay is barely noticeable each month.

Shortening Your Term

In some cases, your best bet for increasing equity is refinancing your mortgage into a shorter term. If you have a 30-year mortgage, for instance, you might be able to refinance into a 15-year option – this will come with higher payments, but your equity will skyrocket if you can afford them.

For more on building equity in your home, or to learn about any of our mortgage loan services, speak to the pros at City Creek Mortgage today. 

While the nationwide mortgage market fluctuates regularly during the course of a given year, the last few years have mostly been in a state that experts would refer to as a “seller’s market.” For those who haven’t heard the term, it generally means that demand for new homes outweighs the supply currently available, meaning sellers are in a good spot and will generally have strong competition among buyers for their available properties.

At City Creek Mortgage, we’re here to help you with everything from finding the best mortgage rate available to navigating the market as it sits during your purchasing window, plus everything in between. If you’re dealing with a seller’s market, what are some ways you can differentiate yourself from other buyers and land the home of your dreams? Here are some basic tips. 

Pre-Approval

Being prepared with all the financial documents and approvals you need to move forward with a purchase can go a long way in the process. One of the first steps here is pre-approval, a process where you submit your financial data and receive information regarding your purchasing power – the kinds of mortgages you can be approved for, the range of mortgage sizes you can afford, and other similarly important details.

After pre-approval, you’ll receive a letter documenting the above areas. You can use this letter to show sellers you’ve already taken the first step in the process and are prepared to move forward if their home is attractive to you.

General Readiness

Along with pre-approval, there are other areas you can attend to while ensuring that every t is crossed and every I is dotted. For one, you can begin your home research well in advance, especially if you’ve done some basic math and at least have an idea of what you can afford. Taking the time to asses the market in your area and become familiar with it will help you be ready to navigate it once the time comes to make your own purchase.

Avoiding Bidding Wars

In today’s home market, the bidding war is less popular than it used to be – and less desirable for many sellers, who don’t want the hassle and fuss and would rather simply put all the cards on the table. In many situations, we recommend being up-front and making your best offer right away. If it’s enough to beat the competition, great. If not, you and the seller can both move to other options without a delay.

Personal Touch

One tip that might break a tie between you and another buyer with a similar offer: A personal touch in the offer, such as a phone call or maybe a brief letter explaining what you envision for the home and your family. Sellers may feel an attachment to the home they’re selling, and may value someone who will care for the home and make it their own.

For more on standing out in a seller’s market, or to learn about any of our mortgage loan services, speak to the staff at City Creek Mortgage today. 

At City Creek Mortgage, we’re here to help first-time homebuyers looking to enter the market in smart ways. From helping debunk common myths that often face first-timers to helping them find the programs that fit their situation, our mortgage experts are here to help if you’re new to the market.

Some of what goes into being a good first-time homebuyer just speaks generally to doing good research, plus being both diligent and flexible during the process. Let’s look at some of the top tips we give our first-time homebuyers.

Research Programs

Depending on several factors, including your credit score, income, locality and even your spousal or children situation, you might qualify for a number of different loan programs that are either designed specifically for first-time buyers or are very beneficial to them. One good example here is the FHA loan, which is backed by the Federal Housing Administration – it allows people who don’t have a full 20 percent available to use as a down payment to get financed with far less money down.

There are other programs that might benefit first time homebuyers as well and you should consider all of these. If you are able to qualify for any of them, they can help make your expenses lower.

Financial Snapshot

To whatever degree you feel comfortable, prepare yourself financially for this process. Many websites have basic financial snapshot worksheets you can complete either on the computer or by hand. Areas you should be looking closely at include your credit score, your income, and your current debt situation compared to your overall credit limit.

Be Ready to Compromise

When preparing for a home search, you should be discussing with your spouse and any other family members the qualities you need in a home and the qualities you desire – and in the latter case, you should be willing to have at least some flexibility. If you have children, multiple bedrooms will be an absolute must that you can’t sacrifice; on the other hand, a two-car family might be able to let go of that dream of a three-car garage if it’s simply outside your price range. Be realistic and flexible on the amenities and qualities you’re looking for.

Down Payments

There are a number of misconceptions out there about down payments, and perhaps the largest is that you absolutely must have 20 percent down to get approved for any loan. Average down payments are far lower than this in reality, and there are some programs that require no down payment whatsoever if you qualify. Once again, do your research here before simply assuming you can’t enter the market without 20 percent up front.

For more tips for first-time homebuyers, or to learn about any of our mortgage loan services, speak to the pros at City Creek Mortgage today. 

Last time in this space, we went over some of the primary “do” areas as part of our two-part do’s and don’ts series for mortgages. Achieving a successful mortgage and home buying experience means following the right steps, but also means avoiding the proper roadblocks to accomplish a few basic things.

At City Creek Mortgage, we’re here to help whether you’re looking at a conventional mortgage, FHA loan, VA loan or another type. Today, we’ll go over the “don’t” section of this series – here are some areas you should avoid wherever possible to ensure a smooth mortgage process.

Make Big Credit Changes

As we noted in part one, credit is one of the single most important factors when it comes to getting approved for a great mortgage rate and program. We went over checking and understanding your credit in the “do” section, but one important point to be made here as well: Avoid opening or closing major lines of credit during periods where you’re looking at a mortgage.

Why? Well, because these behaviors can negatively impact your credit. This, in turn, can limit the programs you qualify for and leave you looking at worse rates than you expected.

Be Unprepared for Document Requests

Mortgage lenders have to be detailed and careful about who they lend money to, and this means getting a full picture of your finances through several different methods. We discussed being prepared for this in our first section, including having documents like your tax returns, paystubs and bank statements available and easy to access.

However, even if you’re very detailed here, be prepared for further possible requests. The underwriter may need some other document to help close the loan, for instance. Don’t be surprised or suspicious here as long as these requests come through the proper channels.

Respond Slowly

Down similar lines, expect to hear from loan professionals you’re working with regularly during the process – and be ready for this. The key to some closing situations is providing documentation and other information quickly, so this needs to be your top priority.

Make Unaccounted Deposits

When it comes to mortgages, lenders place a high priority on being able to document the source of funds you’re using for down payments, closing costs and your monthly payments. Even if you’re using gift funds, for instance, you need to be able to prove the source of these gifts.

For this reason, avoid any large cash transfers you can’t provide this proof for. Regardless of the reason, these could raise red flags and slow or even stop the process in some cases.

Go it Alone

Throughout this process, know that you have help available in every area. Our loan professionals will answer even what seems like the silliest of questions – this is one of the biggest financial commitments of your entire life, and we want you to feel comfortable and supported while taking these steps.

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

At City Creek Mortgage, we’re here to help with every step of the process if you are looking to purchase a home. From your preliminary mortgage research up to closing day itself, plus any refinancing needs down the line, our mortgage professionals will help you understand and move through the stages of acquiring a mortgage and getting into the home of your dreams.

This involves steering you in the right direction, but it also involves the flip side of this: Helping you avoid the pitfalls that can crop up during this process and derail your efforts. In this two-part blog series, we’ll go over the do’s and don’ts for the mortgage process – here’s part one, on the “do” areas you want to emphasize as you get started.

Check and Understand Your Credit

One of the first steps to any mortgage process involves checking your credit score, which has several factors that go into the weighting and final calculation of your number. Not only should you know what your score is, as this plays a big role in the kinds of mortgage programs you qualify for, you should also work to understand why your score is the way it is – particularly if it’s lower than you expected.

You should also be checking your credit to see if there are any inaccuracies from credit bureaus. These aren’t common, but they do happen from time to time and it’s your right to contact the credit agency and have the issue resolved.

Get Pre-Approved

Pre-approval is a process where you submit financial information to a third party, who assesses your situation and gives you a detailed report on the kinds of loans and programs you can expect to qualify for. Pre-approval is a fantastic way to get a head start on the process, and it also shows sellers you’re serious about things and have already obtained proof of your purchasing power. People with pre-approval in hand as they begin their home search can generally make stronger offers than those without.

Keep Solid Records

Lenders require documentation for your income, employment, debt and a few other possible areas. If your records are in good order, including tax documents, this will be simpler for everyone involved. Lenders should be able to easily track how money comes in and out of your accounts to get a good picture of your finances.

Maintain Stable Financial Indicators

Lenders and sellers alike want to see stability in areas like employment and income, so do your best to keep these consistent near the time of a mortgage application. If you were considering quitting your job in the near future, for instance, perhaps hold off temporarily until after closing – even if this move won’t negatively impact you financially. The exception here would be any positive change in this area, such as getting a raise or a promotion, as these make you look better to lenders.

Make a Savings Plan

This is a great time to be saving money, both for your down payment and for important closing costs. Try to avoid major purchases you don’t absolutely need, and focus on a separate account where you save as much as possible.

For more on the do’s and don’ts of the mortgage process, or to learn about any of our home loan services, speak to the friendly staff at City Creek Mortgage today.

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.