Mortgage Rates Utah: Compare Interest Rates In The Beehive State
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If you want to live close to ski slopes and mountain trails, then moving to Utah is the answer. Not only that, but Utah is also famous for low state income taxes, low crime rates, and moderate cost of living.
But buying a home in the Beehive State isn't easy. To help you learn more about the process, read the home buying guide on this page. We'll also give you exclusive access to mortgage and refinance rates in Utah, so you can snatch up the best deal for your next home.
Mortgage Loan Options In Utah
Before signing a mortgage contract with a lender, you need to choose a loan type. Your decision will affect the borrower qualifications, minimum down payment (DP) amount, and interest rates.
You can select among the following loan types:
Conventional loans are those that are not insured by the federal government. To secure one, you need to have a good credit history. You also need to make a down payment of at least 20% of the home price.
Although not everyone can meet these requirements, conventional loans can be used to finance most types of properties, such as vacation homes. They're also faster to close since they come with fewer documentary and eligibility requirements.
Conventional loans are further divided into two types, depending on the loan size:
Conforming loans: Conforming loans follow guidelines set by the Federal Housing Finance Agency. They're usually resold to federal entities like Fannie Mae and Freddie Mac in the secondary mortgage market. For 2021, the limit for most counties in Utah is $548,250, on par with the national average. Check the full list to learn more about the conventional loan limits in the neighborhood you're interested in.
Nonconforming loans: Nonconforming loans are those that don't follow the guidelines set by Fannie Mae and Freddie Mac. The most common type is a jumbo loan, which you can use to finance properties with a very high home price. Jumbo loans usually have higher interest rates because they carry a greater risk to the lender.
Government-backed mortgages are those that are insured by the United States federal government. They come with more flexible credit requirements and lower mortgage rates.
Here are some of the most common government loan types:
Federal Housing Administration (FHA) Loan: FHA loans are designed to help low-to-moderate-income borrowers purchase homes. They have lower minimum down payment and credit score requirements compared to conventional loans. However, keep in mind that FHA requires all borrowers to pay upfront and annual mortgage insurance, regardless of the down payment amount.
United States Department of Agriculture (USDA) Loan: USDA loans are designed to help borrowers purchase single-family homes in eligible rural or suburban areas. Borrowers don't need to make a down payment but should be prepared to pay closing costs. Like FHA loans, you need to fall within the income limits in your state.
Department of Veterans Affairs Loans (VA) Loan: VA loans are benefits offered to members of the military, veterans, and their surviving spouses. They have no down payment requirement, but borrowers still need to pay VA fees and closing costs.
Every home loan has its own terms and conditions. This determines the repayment schedule, whether your interest rate can change, and how much interest will be charged on the principal.
You can pick from the following terms:
Fixed-rate loans have unchanging interest rates. Because of that, the monthly payment amount remains consistent throughout the life of the loan. Generally, you can pick from 10-, 15-, 20- or 30-year fixed-rate mortgages.
Adjustable-rate mortgages have an initial fixed period. Once that period ends, the lender will adjust the interest rate based on a market index they choose.
If you want to pay less during the first few years, this is a good option compared to a fixed-rate loan. However, keep in mind that as the interest rate changes during the adjustable phase, your monthly payment amount may also increase.
Mortgage refinancing means paying off your current mortgage balance by replacing it with another home loan. Most homebuyers do this to take advantage of lower interest rates, change their loan terms, or cash in on their home equity. Check the mortgage and refinance rates on our page before applying for refinancing.
Today's Mortgage Rates In Utah
Before taking out a mortgage, it's crucial to compare mortgage rates from multiple lenders. This will help you see which lender offers the cheapest rate. Check the table below for more information.
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If you want personalized mortgage rates in Utah, use the tool at the top of this page. Simply enter the loan amount and preferred loan term and it will automatically generate personalized interest rates.
Homebuyer Assistance Programs In Utah
As housing prices rise in Utah, it's becoming more and more difficult for buyers to afford the home they want. Thankfully, the Utah Housing Corporation has several loan programs to help buyers purchase properties in the state.
Here are some of your options:
Utah Housing Corp First Mortgage Loan: Under this program, Utah residents can purchase single-family homes, condominium units, or manufactured homes anywhere in the state. Qualifications will depend on your credit score, income, and the purchase price of your home.
Utah Housing Corp Down Payment Assistance Program: Qualified borrowers who take out a 30-year fixed-rate mortgage can apply for aid to cover down payment and closing costs. They can borrow the full minimum required DP as well as full or a part of the closing costs.
Utah Veterans Grants: Under this program, qualified veterans can receive a grant of up to $2,500 upon the closing of their home purchase.
Steps To Buying Real Estate In Utah
Buying real estate can be overwhelming, especially for first-time homebuyers. To help you understand how it works, here's a step-by-step guide on the home buying and mortgage process:
Step 1: Review Your Finances
Before you sign a contract with a mortgage company, you need to take a close look at your financial situation. Here are some of the factors to consider:
Debt-to-income ratio: Most lenders prefer that you spend only about 36% of your income on debt. This includes future mortgage payments.
Closing costs: This will cover loan origination fees, appraisal fees, property taxes, inspections, and more. This typically reaches up to 2-5% of the loan amount.
Down payment: For conventional loans, you need to make a down payment of at least 20% of the home price. Lenders usually require mortgage insurance if you're unable to pay this amount. To save money, check if you qualify for first-time homebuyer programs that offer down payment assistance.
Step 2: Get Preapproved For A Mortgage
Getting preapproved for a Utah mortgage loan is one of the most crucial steps in the home buying process. This shows sellers that you are a serious buyer and you can afford future payments.
Check the table on this page to see the average mortgage rates from various mortgage lenders. This will help you see where you can get a loan at the lowest cost. In general, be advised that mortgage rates in the Beehive State tend to reflect the national average.
Once you've decided on a lender, visit the lender's site and submit your financial and personal information. They'll respond with a preapproval letter if you meet their requirements.
Step 3: Hire A Real Estate Agent
Now comes the most exciting part: house hunting! To save time and effort, it's best to hire a licensed realtor. They can help you look for homes within your price range while considering your must-haves.
Aside from that, an agent can educate you on the median home price per neighborhood. They can even orient you on which neighborhoods have rising home values, so you can see which properties would make a good investment. Who knows? A house with a low property value today might be worth a couple of times more a few decades later.
Once you've found an ideal property, ask your agent to extend an offer to the seller. They can also provide you with helpful advice on how you can outbid other buyers.
Step 4: Apply For A Mortgage
If a seller accepts your offer, congratulations! But it's not yet time to celebrate – first, you need to secure financing for your new home.
You can close the deal with the same lender that sent you your preapproval letter or you can pick a different company altogether. Always check the data on our site to see which lender offers the lowest mortgage rate. After choosing a lender, send them your personal and financial information to apply for a mortgage.
Step 5: Closing And Contract Signing
On closing day, the lender will present several documents for you to sign. It may be wise to look for a real estate attorney who can review your contract. The terms cannot be changed after signing, so clarify every detail with your attorney.
After you sign the papers, you're done! All you have to do now is to pack your bags and move into your new home.
How To Get Better Utah Mortgage Rates
While you can't always negotiate with sellers regarding the price of your new home, you can find ways to make your Utah mortgage more affordable. To do this, you have to get your lender to lower their actual rate. Here are some ways to accomplish this goal:
Purchase Discount Points
You can buy discount points directly from your lender in exchange for a lower mortgage rate. In effect, you pay more upfront but can pay less in the future because of lower interest payments.
The interest rate reduction depends on the lender. They should show you the potential savings figures to help you decide if buying discount points is worth it.
Choose A Shorter Loan Term
Lenders prefer that you pay off your home as soon as possible, so they will offer you a lower mortgage rate if you choose a shorter term. Instead of getting a 30-year fixed-rate loan, for example, you can go for a 20-year fixed-rate loan instead.
Improve Your FICO Credit Score
If you have a good credit rating, you can usually get a lower mortgage rate. That's because lenders view you as low-risk. To boost your credit score, you can do the following:
Pay off student loans, credit cards, and personal loans.
Pay your bills on time.
Review your credit report for inaccurate or outdated information.
Avoid closing credit cards with an outstanding balance.
With home prices rising steadily in the Beehive State, it hasn't been easy for buyers to find cheap homes. But thankfully, using the resources on this page, you can potentially save thousands on your mortgage.
For more information, get in touch with Wesley LLC! We have all the resources you need to get the best Utah mortgage rates.