mortgage basics Tag

Real estate agents have a responsibility to do what is best for their clients. However, this doesn’t always happen. Getting a mortgage is a significant decision for a homebuyer. In many cases, the real estate agent will pressure clients to use their preferred lender. Unfortunately, a referral is often made to a lender that is financially or professionally supporting the real estate agent, rather than because it is the most cost-effective solution for the homebuyer.

The Truth Behind Mortgage Rates
One of the reasons other lenders have higher rates than we do is due to the level of compensation the loan officer is making. If a loan officer wants to make more money,
they simply sell their clients a higher interest rate. When this happens, the client pays more than they need to. Clearly, a real estate agent who wants the best for their clients would not want to add this additional financial burden to people they care about.

For example, a client recently called into City Creek Mortgage to compare the loan offer they received from their real estate agent’s preferred lender. The client was looking to borrow $350,000. When I shared with the client that there was enough income in the rate they were being quoted to purchase a brand-new Toyota Corolla, they were upset. Generally, we can save most clients between 20-50%. In this case, it was much more.

Lenders Who Serve The Agents
Most mortgage lenders market their services to real estate agents under the premise that they will help them grow their businesses. A business model that is designed to provide the benefit to the real estate agent generally comes as a cost to the homebuyer. For example, there are some mortgage companies that have several offices in a community just to provide the convenience to their real estate partners. Clearly, the agent’s convenience provides no value to the homebuyer. However, the homebuyer is the one paying the price each month in the form of a higher mortgage payment.

A Consumer-Focused Model
I believe the right business model for a mortgage company is designed with the homebuyers’ best interests in mind. At City Creek Mortgage our promises and guarantees are to our clients, not to real estate agents. We are a low-cost provider that is designed to keep more money in the pockets of hard working Utah families. For 20 years, this has kept our clients coming back and referring their family and friends to us for their mortgage needs.

If you need help evaluating the price offering of another lender, we can help you. We can estimate the amount of commission income priced into the loan and compare that
to what is priced into a loan offering with City Creek Mortgage. We do what is best for the homebuyer, with the long-term goal of squeezing out the margins in a mortgage industry and eliminate the over-compensated loan officer. As a result, we are the most feared second option by our competitors.

Help us get the word out. When you hear that your family and friends need a mortgage, have them call us. By simply having salaried loan officers and a commitment to make less off each loan, we save people a lot of money. We are Utah’s best mortgage choice and appreciate your continued support.

As a top mortgage company in Utah, we at City Creek Mortgage are here to both help and inform. The mortgage world can be complex, with a number of terms often thrown around that can be confusing to some people.

One such term is mortgage “points,” also called “discount points.” These points help describe how you’ll pay off your mortgage loan, plus any discounts you may be afforded by your lender. Let’s go over the basics and types of points, and whether you should consider paying them.

What Are Points?

In the most general sense, points equal 1 percent of the total loan amount. If the total loan is, say, $300,000, a single point will be equal to $3,000. In many loan situations, points will be paid to the lender upon the closing of the loan. The lender can choose to charge any range of points at this time, but the most common amounts generally charged are two or three points. Mortgage points can be found both for a new mortgage and for a mortgage refinance situation.

Types of Points

There are two basic kinds of points:

  • Origination points: These are used to pay loan officers for costs that relate to the closing of a loan. These points are not tax-deductible, but they can be waived by the lender if they so choose.
  • Discount points: Discount points function as prepaid interest fees. This means the more points paid on a loan, the lower the interest rate will be. Discount points are also tax-deductible.

Should I Pay Them?

Whether you should pay points will vary, and will largely depend on how long you plan to stay in the home. Paying more points represents a higher upfront cost, but will also likely give you a lower interest rate that will cause you to save money over the life of the loan. If you’re thinking of selling after a few years, though, higher interest might not mean as much, and you might not want to pay points.

For more information on mortgage points, or to find out about any of our other mortgage services, contact the brokers at City Creek Mortgage today.  

Within any mortgage situation, the down payment is one of the largest consideration. A down payment refers to how much cash you put down up front when buying a home, and it can be a daunting number for many people.

At City Creek Mortgage, we’re here to help. There are likely more options available than you might think when it comes to the down payment – ways you can exchange certain benefits in other areas of the loan for a lower down payment, or others where you might not even have to make big sacrifices. Let’s look at the basics of a standard down payment, additional options and what these might mean for you.

Standard Down Payment

In most cases, the standard down payment for a mortgage loan will be 20 percent. If the home costs $200,000, you’ll be expected to put up $40,000 in advance. Having this amount on hand increases your chances of loan approval, and also ups your chances of getting the best mortgage rate. You’ll also likely pay lower fees.

Remember to consider other upfront payments, such as closing costs and earnest money. All these payments combined can create issues for some buyers.

Other Options

There are other options for lowering down payment. FHA loans, backed by the Federal Housing Administration, can drop down payments as low as 3 percent. Fannie Mae and Freddie Mac, two government-sponsored companies that drive the credit market, will also offer lower down payments on some loans. There are also housing programs for active or retired service members, or for people living in rural areas.

Other Costs

There are some trade-offs with these lower down payment programs in most cases. There will usually be an additional upfront fee, and you may have to pay private mortgage insurance to cover the lender in case of a default. There’s also a chance you’ll pay a higher interest rate.

Choosing the best option with a down payment in mind will often come down to which upfront costs are included, and which trade-offs you have to make to get a lower payment. Some people are in a financial situation that makes one option or the other the clear choice.

To learn more about down payments or to get advice from our brokers, contact City Creek Mortgage today.