mortgage rate Tag

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.

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.

After the housing bubble burst and record low interest rates eventually surged a few years ago, refinancing a mortgage has become a popular move among homeowners. With the potential ability to lower monthly payments in prime position, it’s no surprise more people have begun to take advantage.

We offer many refinance options at City Creek Mortgage, but we also caution our clients to be careful and consider all their options. There are situations where a refinance might not be the right call, or when misconceptions within the industry may lead you down the wrong road. Let’s look at a few of these misconceptions to help you avoid them in the future.

Refinancing Equity

The housing crisis helped create this particular myth – it’s true that many lenders prefer at least 20 percent equity be held in the home before a refinance, but it’s not a requirement. Many types of FHA or VA loans will offer refinances to people below that threshold, and the HARP program is designed specifically for people with little or no equity.

Mortgage Rates

Many people naturally think their bank will offer the best rate for a refinance, but this isn’t always the case. Lenders won’t give special rates just because you belong to them. This is why using a strong mortgage broker can be successful – it can help compare several loans and find the best rates from a larger selection of lenders.

Cash on Hand

Another common myth is that you need extra cash on hand for a refinance. While it’s true that refinancing comes with closing costs and other fees, there are plenty of situations where these can simply be rolled into your loan. This trade-off may come with a higher rate, but our brokers can help you figure out if it’s worth it for you.

Housing Costs Reduction

Finally, there’s a common assumption that a refinance situation will lower housing costs over the life of the loan. While a refinance does offer short term benefits, these will almost always be paid in some format over time. This is great for many people who may need a bit longer a term (with smaller payments), but know that it could cost in the long run.

Want to learn more about mortgage refinancing or any of our other mortgage services? The brokers at City Creek Mortgage are awaiting your call.

When buying a home there are a lot of decisions you need to make, but perhaps one of the most important is related to your interest rate: should you lock it in advance? Getting the best possible interest rate can help save you tens of thousands of dollars over the course of your loan. If you are in the process of getting a home loan approved and worried that interest rates might go up before you are ready to close, one option is to “lock in” your rate at the current low.

What is “Locking In” a Mortgage Rate?

Once you have a mortgage rate locked in, lenders must offer you a loan at that rate, regardless of what happens to rates between that time and when you close on the loan. There are a few restrictions on the process, though, including the time you can lock in a rate. Generally a lender will let you lock it in between 15 and 90 days before closing (at 15-day intervals). There is also a potential downside: if rates fall during that time you might be stuck with a higher rate.

To Lock or Not to Lock?

The decision of whether you should lock in an interest rate should be made based on your individual circumstances. Some of the main reasons you might consider locking in a rate include:

  • Reasonable expectation that interest rates will increase in the coming month(s)
  • Situations where even a small increase in the rate might cause problems for your budget
  • Deciding to refinance because current rates are much lower than the rate you have right now

The best way to decide whether you should lock in a rate is just to talk to your lender.

Timing Your Rate Lock

You can lock the rate as soon as you initial loan approval goes through, but it is time-limited, so most people wait until they have found a home they want to purchase to avoid having a rate lock expire before your closing date arrives. There is also a cost to locking in your rate for a longer term or if you lock it too soon and need to extend it, so you want to do it at the latest possible date to avoid these extra costs.

Working With Your Lender

The idea of a rate lock is to get the lowest possible interest rate for your mortgage loan, but what happens if you lock in a rate and then they drop again? In some cases you will have to go with the higher locked interest rate, but many times lenders have some flexibility and can work with you. However, since you did lock in a higher rate, the ability to lower it when market rates go down might come with a cost. If you locked in a little early and it expires before your loan closes you may be able to get an extension, but again, there might be fees associated with that.

There are also some situations where borrowers can lose their locked-in interest rate, the most common being a reduction in their credit score or a change in debt-to-income ratio. Keep that in mind, and don’t get into additional debt by racking up credit card charges, buying a new car, or taking out a new revolving credit line.

To find out more about locking in an interest rate and get your questions about the process answered, call City Creek Mortgage today.