mortgage loan Tag

As a top mortgage company in Utah, we at City Creek Mortgage are here to help with every area of your mortgage loan process. We can help you get the best financing for your new home, but we can do much more than this as well – we can also help with some tactics to help pay the mortgage off quicker.

One such tactic? Making biweekly mortgage payments instead of the more standard monthly option. Let’s look at the basics of this option, why it might be right for you, and also some important words of caution in this area.

Biweekly Payment Basics

Simply, a biweekly payment refers to you sending half your mortgage payment every two weeks, rather than paying once a month. Most mortgage loans come with a standard monthly payment option, so some buyers wonder if they can even pay biweekly – the answer is almost always yes. A few options that are usually available include:

  • The lender offers a biweekly payment option
  • A third party offers a biweekly payment option on your behalf and is paid a fee
  • You handle biweekly payments on your own end

Possible Benefits

Here are the primary benefit of biweekly mortgage payments:

  • If you make a half payment every two weeks rather than one full payment every month, you’ll end up with 13 full payments made for a calendar year rather than 12. This will reduce the principal balance on your loan, which will lower your interest totals and allow you to pay the loan off sooner.
  • In many cases, paying a half payment every two weeks is much easier to budget for based on the way you receive your paychecks.

Potential Cautions

Biweekly payments might not be perfect for every situation. Here are a few basic cautions to keep in mind:

  • Make sure your lender allows these payments and applies one of them each month to the principal balance – this is instead of holding it until the other half arrives and then processing it like a normal payment.
  • If you use a third party for these payments, be diligent on your research with them. Check to make sure fees are worth the services, and ensure they are sending payments at the proper times.
  • If you choose to make these payments on your own, check with your lender first to ensure there are no penalties and that payments will be handled in the proper format.

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

First-Time Homebuying Misconceptions

 

The homebuying world is exciting, but it can also be complex and somewhat imposing for first-time homebuyers. At City Creek Mortgage, we’re here to make everything as simple as possible for you as you go through the mortgage loan and home search process.

Unfortunately, a large amount of misinformation spreads across our field easily – there are a lot of amateurs posing as real mortgage experts. Let’s look at a few of the things many first-time homebuyers miss or pass over during their home search process, plus how you can avoid these issues.

Down Payments

Traditionally, it’s been expected that you pay 20 percent of the principal loan amount in a down payment up front. A recent survey showed that over a quarter of all homebuyers think this 20 percent number is a hard, fast requirement – this simply isn’t the case, and getting a home with a much lower down payment is possible in a variety of ways.

There are several loan options with lower down payments, even some that don’t involve a much higher mortgage rate moving forward. If you can get 20 percent down for the home you want, that’s fantastic; if you can’t, there are still options at your disposal.

Real Estate Agents

Many younger homebuyers don’t really understand what’s needed to facilitate buying or selling a property, and they conclude that due to the online resources available to them, they don’t need a real estate agent.

While this might rarely be true, it’s often a detriment to your search. Someone who knows and studies the market is still vital – you don’t just need that information you can find online, you need an expert who knows how to interpret it as well.

Open Houses

Another trend for younger homebuyers is a feeling that an open house isn’t needed. This may be a trend highly impacted by digital tour services now available online, but nothing can replace getting the true feel of the home by seeing it in person.

For more on avoiding common first-time mistakes when searching for a home, or to find out more about any of our mortgage services, speak to the pros at City Creek Mortgage today.

If you’re looking to buy a home but have less than perfect credit or lack the cash for a down payment, an FHA loan might be a perfect choice for you. Backed by the Federal Housing Administration, an FHA loan is a type of mortgage loan that allows for purchases with low down payments and closing costs.

At City Creek Mortgage, we’re proud to provide FHA loans in both fixed rate and adjustable rate formats. These loans are among the easiest loans to qualify for, but they do have a few important requirements that buyers and the new home must pass. Let’s look at these.

Basics

Some basics on the FHA loan:

  • Buyers can purchase a home with a down payment as low as 3.5 percent of the home’s value.
  • Pre-payment penalties do not apply.
  • Interest rates are around 4 percent on average.
  • Buyers need a FICO credit score of 580 or better to qualify.

 

Requirements

Some important credit and financial requirements for FHA loans include:

  • You’ll have to provide a Social Security number or proof of lawful residency, along with steady income over the last two years.
  • Your front-end ratio (cost of the mortgage payment plus mortgage insurance, taxes and other fees) should be less than 31 percent of your gross income, but it can be up to 40 percent in some cases.
  • Your back-end ratio (mortgage costs in addition to spending on other debt from credit cards, student loans, etc.) cannot exceed 43 percent in most cases, or 50 percent in others.
  • If your FICO score is between 500 and 580, you can still get an FHA loan if you make a 10 percent down payment or larger.

In addition, the FHA imposes limits on the kinds of houses that you can get on an FHA loan:

  • The borrower must live in the property as their primary residence.
  • There may be limits on loan value, depending on your area – usually 115 percent of the county’s medium home price.
  • The property must be appraised by an approved appraiser in most cases.

 

Mortgage Insurance

In most cases when a borrower can’t put 20 percent down on the house, a conventional loan will require private mortgage insurance that will drive up the monthly payments. With FHA loans, mortgage insurance will come in two forms:

  • Upfront mortgage insurance may be paid as a lump sum or rolled into monthly costs, but will be 1.75 percent of the loan value.
  • Annual insurance premiums will be added to monthly payments. These will vary, and can range between 0.45 percent to 1.05 percent of the loan value.

For more on FHA loan requirements, or to find out about any of our other mortgage loan services, speak to the pros at City Creek Mortgage today.

The year 2018 is here, and now that we’re all done celebrating the turn of the calendar, it’s time to get down to business. A new calendar year is a good time for those in the mortgage loan world to take a look at some of the trends that took place over the last year, and to forecast how these might carry over into the following year.

At City Creek Mortgage, our experts are ahead of the curve here. Let’s look at a few expected trends for 2018 based on expert opinions in the field.

Rising Home Sales

In recent years, homes have become tougher to find. But 2018 could signal the reversal of that trend, with a growth in inventory anticipated around the fall period. With this, resales of existing homes should rise to a small degree. Experts forecast the southern part of the country to have the most growth, with up to 6 percent growth in some markets.

Rising Mortgage Rates

Mortgage rates were at 4.07 percent in 2017, and they could rise as high as 4.7 percent in 2018 if projections hold. Do remember, though, that mortgage rate is one of the toughest areas to predict – many experts predicted the same kind of rise in 2017, and that never ended up happening. So while a rise of this magnitude is possible, it’s no certainty.

Lowering Home Prices

After several years of insane appreciation, home price increases are expected to slow in 2018. Growth is expected at just 4 percent, in comparison to over 6 percent in each of the last two years. Experts expect home construction to rise significantly, with single-family housing expected to jump by 8 percent.

Equity and Lines of Credit Increasing

Homeowners gain equity as home values rise, and lenders and banks are expecting more borrowing against equity to take place in 2018. Roughly 1.6 million homeowners will receive new home equity lines of credit this year, a 16 percent increase from 2017. By 2022, over 10 million homeowners could have these lines of credit – double the number of the previous five-year segment.

To learn more about changing mortgage trends in 2018 or any of our other services, speak to the pros at City Creek Mortgage today.

Many homebuyers have heard about some of the more exotic home loan options out there, such as interest-only loans, FHA loans, and adjustable-rate mortgages (ARMs), but there is another loan that you might want to know about: the conventional loan, or fixed-rate mortgage. It’s probably not as exciting as some of those other options, but it’s certainly one worth considering if you can qualify for it. Here’s what you should know about the tried-and-true conventional mortgage.

1: Your house payment never changes

The fixed-rate mortgage, as its name implies, is a loan with a single interest rate that remains the same throughout the life of your loan. With a fixed interest rate, your lender will set a specific payment that you make each month to pay toward both the principal and interest on the loan. In the beginning more of this payment will go toward interest, then over time it will shift so you are making a larger portion of that payment toward the principal balance.

2: Your total payment might change

Just because the payment on the principal and interest never changes, though, doesn’t mean that your total payment will never change. Most lenders today will include a few different items in your monthly “mortgage” payments:

  • Principal
  • Interest
  • Property taxes
  • Homeowners insurance premiums
  • Homeowners Association (HOA) fees

The first two will remain constant for all 360 payments (on a 30-year loan), while the other three might go up or down depending on your property. If your payment changes on a fixed-rate mortgage, it’s because one of the latter three items has changed.

3: The initial interest rate might be higher

One of the main drawbacks that homebuyers see with fixed-rate mortgages is the fact that the initial rate is likely higher than that of an ARM. However, the ARM will likely increase after about three to five years, and can continue to go up if market rates increase during the life of the loan. If interest rates go up, your payments go up accordingly, which can squeeze some homeowners financially if they are not prepared for it.

4: There are different loan lengths available

Fixed-rate loans are often available as 10-, 15-, or 30-year loans. As a general rule, the shorter loan lengths will have lower interest rates and you will pay less total interest on the home over time, but your payments will be higher. Shorter loans also mean you will pay off the house sooner and have no mortgage payment. Talk to your lender and review your personal financial situation to find out which might be the best option for you. 

5: You’ll need a down payment

In order to qualify for this type of loan you will need a down payment, usually between 10 and 20 percent of the total purchase price of the loan. If you don’t have that much to put down, talk to your lender about other options that are available.

If you think a conventional loan is right for you, talk to your Salt Lake City mortgage lender today to find out whether you can qualify.