mortgage rates Tag

When it comes to paying down a mortgage, budgeting is a very important area for homebuyers. Failing to stay within a budget may risk missed payments or other issues that can reflect badly on their financial profile, while those who are diligent and disciplined will leave themselves in good shape – and if you go the extra mile, a mortgage can even become a fantastic financial asset.

At City Creek Mortgage, we’re here to help you buy a home that becomes a positive investment for you in the long run. One strategy for doing so? Making one extra mortgage payment each year as part of your budget. Let’s go over the various formats you can use while doing this, plus how this practice will benefit you over time.

Ways of Doing It

There are a few different ways of making an extra yearly mortgage payment:

  • Boosting each monthly payment: Take your extra payment amount, then divide it by 12. From here, just add that amount to each monthly payment – be sure to specify that this additional amount is to be applied to your principal balance, not interest.
  • Bi-weekly payments: Instead of making one monthly payment, take that same amount, divide it in half, and then pay that amount every other week instead. Over the course of the full year, this will result in you making exactly one extra payment toward your principal amount, due to the fact that most months are slightly longer than four weeks.
  • Single lump sum: Spend the year budgeting and saving up a full additional monthly payment, then determine a date when you send it in full. Again, specify that this extra payment is meant to go toward principal only.

Why Do It?

If you have the financial flexibility to use any of the methods detailed above, you should absolutely consider it. Benefits might include:

  • Generating equity: The higher a percentage of your home that you “own” (that you’ve paid off, in other words), the more equity you have in it. This means that you get more profit if you choose to sell, and equity can also be used as a way of creating additional financing for home improvement or other areas. Extra yearly payments build equity faster for you.
  • Paying less interest: As we noted above, you’ll be ensuring your additional payments go toward your principal loan balance. This will lower the amount of interest you pay, as interest is generated as a percentage of the principal amount remaining. Over the life of the loan, you can save thousands of dollars this way.
  • Paying off early: Through a single extra yearly payment, you’ll likely pay off your mortgage several years earlier than you would have otherwise. This frees you from monthly payments faster, plus as we noted, saves you interest.

For more on how making extra mortgage payments benefits you, or to learn about any of our mortgage loan services, contact 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.

One of the primary items you’ll be looking at when you come to a mortgage company like City Creek Mortgage is your interest rate. Also called a mortgage rate, this is perhaps the largest individual financial factor involved with most mortgages.

Do you have any control over getting the best mortgage rate possible? Absolutely. Let’s look at a few of the main factors that influence interest rates, and how you can use them to get the best deal possible.

Market Factors

Maybe the largest factor for many people is the market as a whole, which can fluctuate based on several complex economic factors. These factors are outside any individual control – the best you can typically do here is keep a keen eye on the market and look for opportune moments to get the best rates. At City Creek Mortgage, our brokers can give you some great industry tips on factors that might cause future markets to raise or dip.

Size of the Loan

For the most part, a larger loan amount will equal a higher interest rate. The lender is taking a higher amount of risk by loaning you a larger amount, and the higher mortgage rate reflects that.

Loan Type and Length

The two primary loan types for most people are adjustable-rate mortgages and fixed-rate mortgages. Adjustable-rate mortgages tend to have lower starting rates, but note that these can raise during the period of your loan if the market dictates it. Fixed-rate loans generally have higher starting interest rates, but you get the security of knowing they’ll never go up.

The length of your loan is also important. 10- or 15-year terms generally come with lower rates than 30-year terms – again, it’s just about risk for the lender.

Down Payment

The more money you can put down up front to minimize the lender’s risk, the better rate they’ll give you. Some lenders will require a 20 percent down payment for certain types of loans, though this isn’t always a hard and fast rule.

Credit Score

The factor you have the most individual control over is your credit score, which can get higher or lower depending on your success paying down various forms of debt. There are certain types of loans you can’t even be approved for without a certain threshold credit score, and for many others, credit score will be a huge crux point for your final interest rate.

Want to learn more? Contact the expert brokers at City Creek Mortgage for more information on any of our mortgage solutions.

A school districts location has a substantial effect on the property value of homes nearby. A school district with a good reputation will attract families that have school-aged children. Thus, creating a demand for real estate nearby, this demand can make property values go up.

Homeowners Wealth

The school district itself is not necessarily directly responsible for the rise in property value. More often good schools will be located in neighborhoods that are well-off and have a higher standard of living.

The affluence in such neighborhoods has a tendency to help create school districts that have high test scores and higher student performance than those located in poorer areas.

Therefore when real estate is located near a good school district, the property value will tend to be higher than surrounding areas.

Higher Demand

A good school can bring stability to the community, so when buying a home there is a high demand for a good school close by. With this demand and a limited product such as real estate the property values are higher.

Houses that are located in a highly pursued school district will often sell for higher prices than a similar home in a not so popular school district.

More often buyers will be willing to pay more than their budget and even give up certain amenities in order to get a home in their desired school district.

Better Resale Value

The school district is an important aspect to consider when you are buying a home even if you don’t have children. It could have an intense effect on the resale value of your property.

A property that is positioned in a good school district will be more likely to hold its value or even increase in value when the rest of the market may have slowed down.

A lot of home buyers are prepared to pay more for good schools and are willing to trade a larger home for a smaller one just to be in a better school system.

Whether buying or selling a home in a good school district you can expect that the price will be higher than a less desired school district.

Call on a Mortgage Specialist to Help You

Purchasing a house is a huge decision, one that many call the biggest monetary choice in an individual’s life. There are so many twists and turns in the path to home ownership for today’s buyers that it is easy to lose the way. These are not the old, simpler days when George Bailey, heading up the Bailey Bros. Building and Loan, could lend you the funds to build a cute little cottage in Bedford Falls, and thereafter live a wonderful life.

In the modern labyrinth of home financing, a reliable guide is essential for home buyers—and not only first-timers but for veteran home owners as well—to take the right turn and find their best financing options. An expert, forward-thinking finance company can offer buyers multiple alternatives, making it easier to make the best choice.

Decisions, Decisions 

A reputable and trustworthy finance or mortgage specialist will give would-be home buyers information about the many purchasing choices they have, starting with a Purchase Overview that features articles and answers to some frequently asked questions. This introduction, if thorough, should also list the various financing programs, with links to each one.

Descriptions of Common Purchasing Programs

 Here are some explanations and definitions of popular financing plans that a reliable finance or mortgage company will supply.

  • Conventional purchase—Includes an explanation of the advantages of both fixed rate and adjustable rate loans.
  • FHA purchase—Describes advantages of this type of purchase program and specific benefits of both fixed and adjustable rates for loans.
  • VA purchase—Details on this fixed rate loan program for active military men and women, veterans and surviving spouses.

Information About Less Well-Known Financing Options

 A solid finance or mortgage specialist will also give potential home buyers information about less common financing choices.

  • Jumbo purchase—As the name implies, this is a big loan that is over $510,400 and up to $3 million. A certified mortgage planner can help you choose between the fixed and adjustable rate options.
  • Rural housing—A government-subsidized loan for low- to moderate-income families who live in selected rural areas.

Other not-so-common options include:

  • Utah housing
  • Home path
  • Your Term Mortgage

When you are considering buying a home, there are so many more decisions to make than whether you like the kitchen layout or the bathroom fixtures. An experienced mortgage specialist can guide you through the maze of financing choices so that you will make the best choice for you and your family.