Month: September 2023

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Real Estate Investing: Wealth through Home Ownership

Become a millionaire real estate investor by simply purchasing homes.

Have you considered the benefits of becoming a landlord as rent prices and real estate prices around the world continue to increase? To illustrate, interest rates are a negligible detail when a renter is paying the entirety of your mortgage. Wouldn’t you agree?

Most importantly, it’s worth noting that a significant number of millionaires in the United States have created their wealth by simply purchasing homes. Don’t believe us at Utah Mortgage Rate? CNBC’s claims, “Real estate is still the best investment you can make today, millionaires say—here’s why.”

Investing in real estate has a reputation that discourages Americans.

Yet, the most tried and true path to building generational wealth involves owning multiple homes and having tenants cover your mortgage expenses. However, traditional investment properties, secondary mortgages, and rental loans often demand a 20% down payment and savings.

Furthermore, these requirements create a substantial barrier for aspiring investors and families. Not to mention these mortgages designed specifically for rentals often carry unattractive interest rates that prevent the ability to qualify further.

Housing is the only necessity disguised as an investment vehicle.

21,951,000 people in the U.S. have a net worth of $1 million or more. 40% of an average millionaire’s assets consist of real estate. 

federal reserve
Diverse individuals racing towards homeownership, symbolizing the competitive nature of homeownership, and securing mortgage lending in today's real estate market.

The key to this strategy is occupancy.

For this reason, at Utah Mortgage Rate we provide a unique pathway to help you become a millionaire real estate investor. Especially, for our clientele with limited cash assets. To begin, the strategy to growing an abundant real estate portfolio is through primary mortgages.

Owning a real estate portfolio worth millions is achievable through primary mortgages.

In this scenario, when you apply for your initial home loan, your intention is to live in the property. If you’re a First Time Home Buyer you have a lower minimum requirement of 3% or 3.5% for a down payment. After your initial purchase, each subsequent home only requires a minimum down payment of 5%. Also, if you’re a veteran or in a rural area the required down payment amounts could be even less. More information regarding VA Loans for our brave service members can be found right here at Mortgage Rate Utah.

Image the equity gains you’ll acquire over time if you own multiple mortgages.

To clarify, this strategic approach regarding occupancy allows you to accumulate home loans that require minimal cash down payments. You can transition your first property into a rental property when you’re ready to occupy a new home. It’s crucial to buy your next property with the intent to live in it initially. Primary mortgages are only originated for owner-occupied properties.

In other words, this strategy secures better mortgage terms and gives investors the opportunity to accumulate properties without large down payments. Eventually, after that one year has passed you can apply again for another primary mortgage with a Mortgage Broker.

As a result, your first home becomes an income-generating asset, generating generational wealth and appreciating over time. More importantly, the mortgage terms remain unchanged throughout this process.

Don’t wait to buy real estate. Buy real estate and wait.

Purchase. Occupy. Rent. Repeat.

The average American can realistically repeat this process multiple times creating an accumulating portfolio of properties. This can potentially lead to substantial equity gains. For guidance on the number of homes you can own, you can consult Fannie Mae’s guidelines on their website.

Envision the hundreds and thousands of dollars in equity accumulation. In fact, explore your next down payment options today through our HELOC blog post.

Secure your future and begin building generational wealth with Utah Mortgage Rate and our strategies.

Have you considered your future average net worth? Ultimately, your journey to wealth creation can begin today. Accelerate your net worth with assistance from our local real estate agents. To learn more about what preparation is required to purchase a home we have helpful information for your learning journey.

However, imagine sitting down with an expert Mortgage Broker and a Local Utah Realtor today. Above all, we can discuss the beginning of many investments in real estate with a no obligation consultation.

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Beginner’s Guide to Banking

Banking For Beginners - A Basic Guide

Entry-level Banking Guide

Welcome to a beginner’s guide to banking. If you are looking to get a better understanding of basic banking for beginners, or just starting out on your financial journey, you are in the right place. Banking is the foundation of personal finance, and it is important to understand it with confidence. This page provides you with a basic understanding of four crucial pieces to a healthy personal financial plan. Once you are familiar, we recommend that you navigate to other pages on this website for deeper insights.

Checking and Savings Accounts

            The first step of the beginner’s guide to banking is opening checking and savings accounts. A checking account stores the majority of your spending money. This account is used for day to day purchases and a great start for banking with 16 year olds. You can access the money in this account by making cash withdrawals at a branch or using a debit card. You can fund this account with cash or check deposits. Once you are comfortable with the amount in your checking account, you can start a savings account. It is recommended that every adult has a savings account that can cover you for 3-6 months with no income. Savings accounts are a place to store money for a rainy day. They are not as easily accessible as a checking account. However, you can make transfers from your savings account to your checking account if needed. Savings accounts typically pay interest. Hence, the balance in your account will increase by a specific percentage each month, even if you do not make any additional deposits. To find what are good banks to open an account with, you can check different interest rates on websites such as Nerdwallet. There are also different types of savings such as money market accounts and CD’s. (insert internal links to money market page and CD page)

Learn Banking For Beginners To Help Your Family
Learn Banking For Beginners To Help Your Family

Credit Score

            Your credit score is essentially a ranking given to you by a reporting from places such as Transunion or Experian. A good credit score allows you to take out loans with better interest rates and apply for credit cards with better benefits. Eligibility for a credit card begins at 18. Therefore, many parents help their children open this account when they start banking for seniors. In order to have a good credit score you must have a credit history. You collect this by obtaining a credit card, using it, and paying it off on time. Credit cards allow you to borrow a set amount of money each month. It is important to pay it off before the end of the month so that there is no interest. However, the longer each month you wait to pay it, interest will accrue meaning that the balance will grow. To have good credit you also must make good on your loan payments.

Credit Score Ranges

  • 800 to 850: Excellent – Borrowers within this range are deemed low-risk. This makes it easier for them to secure loans compared to those with lower scores.
  • 740 to 799: Very good – Those falling into this category have a track record of positive credit behavior, increasing their chances of approval for additional credit.
  • 670 to 739: Good – Lenders generally regard individuals with credit scores of 670 and above as acceptable or low-risk borrowers.
  • 580 to 669: Fair – People in this group are often labeled as “subprime” borrowers. They are considered higher-risk by lenders and may struggle to qualify for new credit.
  • 300 to 579: Poor – Individuals within this range frequently face challenges in obtaining new credit. If you find yourself in the poor category, it’s likely that you’ll need to take steps to improve your credit scores before securing any new credit.
How It Feels To Have a Good Credit Score
How It Feels To Have a Good Credit Score

Loans

            A loan is an arrangement where one party borrows money from another. In this case, we will assume that you are the borrower and a bank is the lender. You will pay back this money over time with interest. This means that you will pay the lender back more money than what you borrowed. Paying back a loan quickly reduces the amount of interest you’ll need to pay. People use loans for various purposes, including buying cars, boats, managing personal finances, and acquiring homes. There are multiple different types of home loans, such as FHA loans and VA loans. Loans are a valuable resource but can cause intense levels of debt. That is why it is important that you comprehend the terms and repayment schedules of your loans.

Investing 

To learn to invest is where finances get more complicated. However, trained professionals can help you. Investment companies such as Fidelity and Edward Jones can help match you with an advisor. Financial advisors help find an investment strategy that meets your goals while staying within your risk tolerance and financial capability. These strategies can include stocks, bonds, real estate, or businesses. The typical goals of investing are to generate and preserve capital. In today’s economy, to begin investing is often a vital piece of a healthy financial plan. 

Next Steps In Banking For Beginners

While some banks might offer different interest rates or incentives, there is no best bank for beginners. It depends on your situation and preferences. Banking is crucial, and although there are many different ways to go about it, we are here to help. Just by being on this page, you are taking the first step to learn more about finances. After reading a beginner’s guide to banking, you can find many other helpful resources on our website. Learn about Home Equity Lines of Credit HELOC, Refinancing, How to Start Investing, and How to Prepare for Buying a Home.

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Homeowners Insurance

What is Homeowners Insurance ?

Homeowners insurance is a vital financial safeguard for homeowners, offering protection against various risks that can damage or destroy your home and its contents. It provides peace of mind by ensuring that you won’t face severe financial losses in case of unforeseen events such as natural disasters, theft, or accidents. It’s arguably a necessity for all homeowners. 

Homeowners insurance tips
Homeowners Tips on Policies, Coverage, Premiums, and more

Policy Types

There are several different policy types available and it’s important you are educated about them in order to choose the correct one for you and your needs. Some of the most common options include HO-3, HO-4 and HO-6 policies. An HO-3 policy protects your home and personal belongings, HO-3 is simple, basic and the most common type of homeowners insurance. HO-4 is another type of policy which applies to renters, it protects their personal belongings from unforeseen events but it does not cover the actual structure itself. These different types of policies are important to understand and we are more than happy to help guide you through this process. Click here for more help !

Coverage Limits and Deductibles 

The understanding of coverage limits and deductibles is an extremely important aspect of homeowners insurance. Coverage limits determine the maximum amount that your insurer will pay for a covered loss, and deductibles are the amount that an individual must pay out of pocket before their insurance policy steps in. In order for a homeowner to make an informed decision, it is vital that they understand how both of these factors affect their policy and their premiums.

Factors Affecting Premiums

Insurance premiums are always subject to change, and they are affected by many different factors. Things such as location, construction and age of your home are all important factors when considering a home’s premium. In addition, supplementary things such as security systems and a good credit score can lower costs for homeowners. Knowing this type of information is important because it can help lower insurance costs for homeowners.

The Claim Process

Having the knowledge to be able to navigate the claim process is essential in the case of disaster or emergency. The claim process consists of reporting the damage to your insurer in a timely manner, properly documenting the damage with photos, and keeping records of all the communication that takes place. We will also provide valuable tips on how to maximize your claim and receive fair compensation.

Need more help?

We hope you feel a little more educated on Homeowners Insurance. Homeowners insurance is a crucial financial safety net for homeowners, shielding homeowners against natural disasters, theft, and accidents to ensure your home and personal belongings are safe. These different policies are all designed to provide you with peace of mind, that in the event of  an unforeseen circumstance affecting your home and its contents, you will not suffer devastating financial losses. Understanding policy types, coverage limits, deductibles, premiums and the claim process are all important, but we want to help alleviate your stress and make this an enjoyable journey. We understand that this process can be overwhelming, click below to check out these websites and learn more!

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Cash-Out Refinance

What is a cash-out refinance

A Cash-out Refinance is a specific type of mortgage plan which allows a homeowner to loan more than they owe on their current mortgage and borrow the difference in cash. This is possible because homeowners are using the equity in your asset as collateral to refinance your home. Typical cash-out refinances can take up 80% of your home, but some allow you to borrow up to 100%. It’s typical for lenders to ask that the homeowner have at least 20% of your home’s equity. The cash from a cash-out refinance can be used for anything, but typically is used for home improvements, debt consolidations, and other large expenses.

Take your equity and put it back in your pocket.

Qualify for a cash-out Refinance

There isn’t a one size fits all when it comes to a cash-out refinance, as homeowners must meet specific lender requirements. Here are some of the most common requirements:

  • Debt-to-income ratio (DTI) – The Consumer Financial Protection Bureau recommends a maximum of 43% DTI, however high credit scores may influence the lender to accept higher debt-to-income ratios.
  • Credit score – An acceptable credit score of 600-650 should pass requirements for most lenders. However, as with all loans, a high credit score will offer better interest rates and influence lenders in the homeowners favor. 
  • Home equity – For an average credit score stated above, homeowners need at least 20% equity in their home. This means the homeowner has paid off 20% of the current appraised value of the home.

What are the Benefits of a Cash-Out Refinance?

One significant benefit of a cash-out refinance is converting your home equity into ready-to-use cash. Owners use these funds to consolidate debt and also fund home improvement projects. Other key benefits of cash-out refinance are paying off debt, purchasing other assets, improving your credit score, and investing in new business. In addition, they also offer fancy rates compared to those you’d get on a credit card. Furthermore, you can also pay back your current loans or other existing loans.

Qualify Now
Happy couple making informed financial decisions

Top Refinance Lenders

Looking to refinance a mortgage in Utah? You are not alone and there are many great lenders out there at the time. It is better to be proactive than reactive in a market like this. Most lenders look for 20% home equity, a minimum credit score of 600, a Debt to Income Ratio of 43% or lower, an employment history, and a specific property type. Research shows that the best Cash-Out-Refinance lenders 2023 in Utah are; Altius Mortgage, American Refinancing, Shilozitting, and Onepoint Mortgage. 

Additional Resources

Cash-out refinancing is one of the most popular forms of mortgage, which allows the homeowner to borrow cash from the lender. In addition, Utah also offers some of the most attractive interest rates for homeowners looking to turn equity into ready-to-use cash. Websites such as reddit also allow homeowners to research more about refinance lenders in Utah, linking them back to our website. Cash-out refinancing is one of the best options if you are in need of paying off a current or existing loan or simply purchasing other assets.

Learn more about refinance resources.
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Home Equity Lines of Credit (HELOC in Utah)

Couple learns about refinancing HELOC

UTAH HELOCs Defined

In order to properly understand a Home Equity Line of Credit it is important to first understand
a Home Equity Loan. A Home Equity Loan is simply a loan you can take out using your house
as collateral. These loans are typically fixed-rate HELOCs, allowing borrowers to have an idea of what their monthly payments will look like throughout their payment schedule. A Home Equity
Line of Credit, or HELOC, is similar to a Home Equity Loan through the idea of using your
home as collateral to borrow money. However, a HELOC is similar to a credit card in the ways
that you can draw on funds almost instantaneously. Once you draw funds, they
usually carry a variable, or floating, interest rate that changes with the market. Fortunately, these
funds have no interest rate while untapped allowing a HELOC to be a nice source of emergency
funds.

Draw Period vs. Repayment Period & Variable Rate vs. Fixed Rate

There are two phases of a HELOC: the draw period and the repayment period. The draw period commences when you receive approval for a HELOC and typically lasts about 10 years. During this phase, your loan is a line of revolving credit with a variable interest rate. You may borrow as much as you need up to your limit. An alternative to a variable rate is a fixed rate HELOC. A fixed rate may protect you from market fluctuations that affect variable rates and typically allows locking in for anywhere between 5 to 30 years. So why not choose a fixed rate? As compared to a traditional variable rate, fixed rates may have higher initial interest rates, which could incur more fees and penalties, and are typically more difficult to find in the market. Whichever rate type you choose, once the draw period is over, you begin the repayment period where access to the line of credit ceases and payments on the outstanding balance may begin. You can make payments monthly or in a lump sum. If you make payments over time, the repayment period is about 20 years.

Utah Heloc Loan

Cash Out Refinances vs. HELOC

Getting a HELOC isn’t the only way to tap into the equity held through the ownership of your home. You can also take out a loan using cash-out refinancing. This process includes taking out a new loan that replaces your original mortgage. If your new loan is bigger than the balance on your previous loan, you can pocket some extra cash. It is important to consider interest rates when taking loans and with cash-out financing you are often looking at a reduced rate compared to your original mortgage. Homeowners use cash out refinancing in a similar fashion to HELOCs and often make improvements to their property. Homeowners even use cash-out refinancing as a way to consolidate credit card debt. In certain interest rate conditions, it may even make sense to refinance a HELOC!

How to Maximize Equity with FHA

Low to middle-income families use FHA loans to become a homeowner easier with lower monthly payments, lower down payments, or both. Over time, the value of the home appreciates and the homeowner builds equity in their home. The HELOC allows them to access a portion of this equity and spend it on whatever they please. This typically results in home improvement projects, investments, starting a business, or emergency situations. This allows for more financial flexibility for households with generally lower annual income. If you are considering home improvement projects, an FHA 203(k) loan is a suitable option, and you will collaborate with a lender to obtain approval. Make sure you have conducted thorough research into HELOC rates and FHA 203(k) rates to ensure you are not falling victim to large interest payments. You will need to strategize your spending with both HELOC and FHA 203(k) to ensure a positive return on investment when the project is complete. Pay down the HELOC balance and mortgage principal to increase your home’s equity even more!

HELOC loan

When is the Right Time to Refinance with your HELOC?

Similar to refinancing your home, finding the right time to refinance with a HELOC is dependent on your current finances. For example, using a HELOC may be a good idea if you need to borrow large sums of money regularly or borrow equity. It could also be the best option for some people’s budget to refinance with a HELOC. Even if it costs more in the long run, it can help those who have neared the end of their draw period but cannot afford to start repaying the principal as scheduled. Refinancing can help you reduce your monthly mortgage payments and free up money to cover other expenses. It can also help you access additional cash if you need it. Finding the best bank to receive a HELOC, comparing interest rates, repayment terms, and the best no fees HELOC is also important.

HELOC in Summary

In short, a Home Equity Line of Credit, or HELOC, is a line of revolving credit derived from your home equity value. Although this loan most commonly has a variable interest rate, it is possible to secure a fixed interest rate. HELOCs are commonly used for large expenses, such as home improvement projects. Take some time to define your situation and needs. This will help you determine if a HELOC is right for you and if not, what alternatives may better suit your needs. Don’t feel frustrated – understanding HELOCs takes time. To learn more about these loans visit Investopedia and the Federal Trade Commission.

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Preparing to Buy a Home

Buying a home in Utah is a multifaceted process that includes financial, emotional, and logistical considerations. It is a detailed series of steps for homebuyers to take to ensure they are well-equipped and informed before making a significant financial investment. Here, we have a detailed list of how to prepare to buy a home.

Preparing to buy a home includes:

  1. Financial decision
  2. Setting goals 
  3. Market research 
  4. Mortgage pre-approval
  5. Hiring real estate professionals
  6. Property inspections 
  7. Understanding legal and financial documents
  8. Budgeting for closing costs
  9. Contingency plans
  10. Negotiating and decision-making

Financial Decision

woman hugging man from behind. couple relaxing in home browsing internet on laptop about mortgage rates. This couple is learning about how to prepare to buy a home
Happy couple making informed financial decisions

Your financial decisions play a pivotal role in the mortgage process. They shape the terms and conditions of one of your life’s most significant financial commitments. Choosing the right mortgage loan type, whether fixed-rate, adjustable-rate, or government loan, such as an FHA loan, can significantly impact your monthly payments and long-term financial stability. Moreover, deciding on the loan term also influences your monthly budget and the total interest paid over the life of a loan. A fixed mortgage loan can take anywhere from 15, 20, or 30 years.

The size of your down payment affects the initial cost and ongoing financial obligations. Beyond the mortgage, understanding the importance of maintaining a solid credit score, managing debt wisely, and budgeting for related expenses like property taxes and insurance are vital in making sound financial decisions when securing a mortgage. Each choice you make contributes to your overall financial health and ability to navigate the path to homeownership successfully.

Mortgage Rates

Making informed decisions about mortgage rates in order to purchase a home.
Woman looking over mortgage rates

The average mortgage rate in Utah is 8.08%. And, we have the best mortgage rates in Salt Lake City. For help determining your mortgage loan, visit our mortgage rate calculator.

Mortgage Pre-Approval and its Importance

Financial advisor showing report to young couple. Happy couple consulting financial agent for refinance mortgage loan rates to prepare them for buying a home.
Happy couple consulting financial agent for refinance mortgage loan rates

A crucial step when preparing to buy a home is to obtain a mortgage pre-approval. This is an assessment by a lender to determine how much money they will lend you for a home purchase. This involves a review of your financial situation, including credit score, income, debt, and assets. Securing a pre-approval letter helps loaners understand the homebuyers’ budget and makes you, as the homebuyer, more attractive to sellers.

Budgeting for Closing Costs

Person using a calculator to budget how much they should spend to prepare to buy a home
Budget how much you should spend to save for a home

Lastly, budgeting for closing costs is a critical aspect of the home-buying process that is sometimes overlooked. These costs cover a range of expenses, including appraisal fees, title searches, attorney fees, property taxes, and insurance. They can amount from 2% to 5% of the home’s purchase price. Having a clear understanding of these costs and how to budget for them ensures that you’re financially prepared when it’s time to close on your home. Thus, by preparing for closing costs at the beginning, you can avoid last-minute financial stress and ensure a smoother transition into homeownership.

Overview: You are Ready to Buy a Home!

In summary, when buying a home in Utah, there are a few essential things to remember. First, your financial decisions, like choosing the right mortgage loan type and the loan term, can significantly impact your monthly payments and long-term financial stability. For example, having a solid credit score, managing debt wisely, and budgeting for expenses like property taxes and insurance. Additionally, getting a mortgage pre-approval and budgeting for closing costs are necessary steps, too. By being well-prepared and making smart financial choices, you’ll be on your way to homeownership! 

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30-year vs. 15-year Mortgage Loans

What is a Loan?

When looking to buy a home, one can either pay upfront or use a home loan called a mortgage. A mortgage allows home buyers to buy a house when they don’t have enough money to pay for it outright. The loan comes with terms pre-determined by both parties, the lender and the buyer. These terms include everything that is included, including the total sum, the interest rate (extra money one has to pay for borrowing the money), and the rate to which it has to be paid back (usually 15, 20, or 30 years).

Which Term Length is Right for Me?

15-year and 30-year mortgages.  The main differentiator between these two rates is the time it takes to repay the loan. For 15-year mortgages, the buyer has a repayment period of 15 years, meaning that borrowers must make monthly payments for 15 years until the loan is fully paid off. In turn, with 30-year mortgages, the buyer has a repayment period of 30 years. When it comes to making these monthly payments, 15-year mortgages are typically more expensive than that of a 30-year mortgage. Since the term is shorter, borrowers have to pay off the principal (each payment) and the applied interest in a shorter amount of time. This results in larger monthly payments. Buyers can count on 30-year mortgages to be lower, as they are stretched over a longer period. This can make homeownership more affordable on a month-to-month basis.

Interest rates, or the amount a borrower is charged for the money, are typically lower on a 15-year mortgage, than on that of a 30-year mortgage. When choosing between a 15-year and 30-year mortgage, the buyer has to consider their financial flexibility. As a buyer can expect a 15-year mortgage to be more expensive, they can also expect to own their home outright sooner. With 30-year mortgages, lower monthly payments can provide the buyer with more financial flexibility. On the other hand, it takes longer for the buyer to own their home outright. This being said, when it comes to choosing a mortgage rate, consider the long-term financial plans, and whether or not to pay off the home sooner, at a higher rate, or delayed and at a more manageable monthly payment. To estimate the monthly mortgage, see our Mortgage Calculator to break down the payments.

Interest Rates

There are two main types of interest rates. The first one is a fixed interest rate. That means from the moment that the loan is taken out, the rate will be constant. If it starts with 6.8% interest on the loan, that is what will be paid until the loan period ends. The second is an adjustable-rate mortgage. These have the ability to change after a certain amount of years. An example would be the 7/1 loan. This loan has a fixed interest rate for the first seven years and will vary each year after that until your loan pay period is up. There are several that have that same format.

Most mortgage companies have 3 main factors they look at when deciding what your interest rate will be. The first is based on how much money you would be able to put toward a downpayment. They usually require 0%-20%. If you place more, It can lower your interest rate. The second is your credit score. Many require a minimum credit score. The further away you are, the higher the chance of getting a better rate. Lastly, your debt-to-income ratio. This is how much you pay in debts each month compared to how much you make. You have to have at least have 50% higher income vs. your debts to get a better rate.

How to pay off a 30-year Mortgage in 15 years.

So, what if you can’t pay the higher monthly payment associated with a 15-year mortgage but don’t want to be caught with hundreds of thousands in interest? Or maybe your credit score was too low or your debt-to-income ratio was too high to qualify for a 15-year mortgage. Not to fear! This is where refinancing comes in. Let’s say you’ve been paying off your 30-year mortgage for four years and have reached a new height of financial stability or get married and can now afford a higher monthly mortgage payment. At this point, you could opt to restructure your loan to a 15-year mortgage and pay it off in just under 20 years.


Alternatively, you can pay extra installments of monthly payments straight to your principal in order to pay off your 30-year mortgage at an earlier rate. In order to do this you must make sure your mortgage agreement doesn’t have a prepayment penalty, which is written into your agreement. If this is the case, you can make one extra payment a year for a total of 13 payments and pay off your mortgage around four years earlier than expected. This compounds, that if you make two extra payments a year you can pay off your mortgage for around seven to ten years. Altogether there are many strategies to customize your mortgage to make it fit your life and lifestyle at any given time.

Pros and Cons of 15-year mortgages and 30-year mortgages.

How do you know what mortgage is right for you? There are benefits and disadvantages to both types of mortgages. Let’s look at the pros and cons of 15-year mortgages and 30-year mortgages.

Pros and Cons of 15-year mortgages

Starting with 15-year mortgages there is one major pro, you have the chance to save thousands of dollars. Lenders will typically charge a low interest rate for 15-year mortgages so over time you will save on interest. You also have the ability to own your home in 15 years, and you can build home equity faster. When you pay off the balance of your loan faster, you build equity faster.

The cons to be aware of with 15-year mortgages are that your monthly payment will be higher. You will want to be prepared before you commit to a high payment as it may put a strain on your budget. 15-year mortgages may be harder to qualify for because your lender will want to ensure that your income can accommodate the larger interest payments. It may be helpful to look at our mortgage calculator to see what kind of monthly payment you can afford. 

Pros and Cons of 30-year mortgages

The 30-year mortgage is the most popular loan to get. The pros of the 30-year mortgage rate is that it will have lower monthly payments. A lower monthly mortgage rate can allow for savings in other areas such as investing. There is flexibility in a 30-year mortgage rate. You can pay off the loan faster by adding to your monthly payment or by making extra payments. Other pros include more house for your mortgage, so this means you may qualify for a larger home. It is also easier to qualify for a 30-year mortgage.

The downsides to a 30-year mortgage rate are as follows. There are higher interest rates on a 30-year mortgage due to the mortgage lender’s risk of not getting paid back is stretched over a longer period of time, this also means that you will pay more interest over the lifetime of the loan. Finally, it takes longer to build equity in your home. Whichever way you want to pay, we are here to help you through the process of buying a home.

Summary

So, you’d like to buy a home without paying the full price upfront. The most common way to do so is with a 15-year mortgage or a 30-year mortgage. 15-year mortgages are typically more expensive month-to-month, but allow the buyer to own their home sooner. In turn, 30-year mortgages are a more manageable monthly payment but result in more interest over time and a longer pay period.

When it comes to mortgages, the buyer must consider their interest rate, whether fixed or adjustable. The lender will reference the buyer’s down payment, credit score, and debt-to-income ratio to finalize their rate. Whether the mortgage has a 15 or 30-year payment, the interest rates and terms will affect their monthly payments and overall costs.

When looking into which mortgage rate is best for the buyer, weighing the pros and cons will help develop an answer. For 15-year mortgages, the positives include potential savings on interest, faster home ownership, and quicker equity building. However, the complications come with higher monthly payments and stricter qualification criteria. In turn, 30-year mortgages will offer lower monthly payments, flexibility, and easier qualification. They also come with higher interest costs and slower home equity building.

All in all, there is no one-size-fits-all for mortgage rates. The buyer should weigh their options to find what is best for them. For questions, or a full walk-through of the mortgage process, reference our Support tab on our website.

Financial advisor showing report to young couple. Happy couple consulting financial agent for refinance mortgage loan rates
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Refinancing Your Home

What is Refinancing?

Mortgage refinancing is a financial strategy that allows homeowners to replace their existing mortgage with a new, more favorable loan. Many homeowners choose this route to save themselves money in the long-run. Refinancing can result in homeowners obtaining more favorable terms, reducing monthly payments, obtaining lower interest-rates, and achieving other financial goals related to their home. Homeowners typically consider refinancing when interest rates fall and economic conditions prove better than they were at the time of the last mortgage closing. To understand current mortgage rates in Utah better visit the Utah Mortgage Rate Calculator page. Other reasons for refinancing may be due to positive changes in credit profiles, to change the duration of the loan, or to switch to a different type of loan.

Refinancing Your Mortgage

The decision to refinance a mortgage is driven by various factors. These include the desire to secure a lower interest rate, reduce monthly payments, or access the equity built in the home. Reasons to refinance can also encompass debt consolidation, adjusting the loan term, or switching from an adjustable-rate mortgage to a fixed-rate one for stability. Whether motivated by financial savings, improved loan terms, or changing financial circumstances, mortgage and refinance options offer homeowners valuable opportunities to enhance their financial well-being. To better understand the best direction is for you, visit our 30 year vs 15 year Mortgage Loans page.

Financial advisor showing report to young couple. Happy couple consulting financial agent for refinance mortgage loan rates

How to Refinance? The Refinancing Process 

Here are the 5 steps to follow in your process of refinancing your home:

  1. Preparing and Applying to Refinance
    1. When applying to refinance you will need the same paperwork you provided when you originally mortgage your home: pay stubs, W-2s, bank statements, tax returns. You will also need your spouse’s documents if you are married and in a community property state.
  2. Choosing your Refinance Interest Rate Type
    1. After you get approved, you have two options for your interest rate: lock it in or float your rate. When you lock your interest rate you are guaranteed to have the same interest rate no matter if the rates rise after you lock. However this also means that the mortgage rates lower you are stuck at that higher initial rate. The best way to make this decision is to watch the markets and look at future predictions. If you go with a floating interest rate your rate will depend on the market conditions and have the possibility of going up or down.
  3. Getting Approved
    1. Behind the application process, a lender will evaluate your credit history, look at your debt-to-income ratio, verify your down payment and savings. They can also order an appraisal heading into the next step. 
  4. Getting a Home Appraisal
    1. Your lender will order an appraisal on your home. All you will have to do is make sure that your house looks amazing for the appraisal.
  5. Closing Your New Home Loan
    1. Once you have completed all the previous steps, it is time to close on your loan. During this stage, you will go over your details and sign them to make them official. There is usually a 3-day grace period for you to change your mind if something comes up.

For more details about the Refinancing process check out Rocket Mortgages Refinancing Steps.

Reasons to Refinance

Refinancing can be a smart financial move for various reasons including:

  • Getting a Lower Interest Rates: One of the primary reasons homeowners refinance is to secure a lower interest rate for their existing loan. By doing so, they can decrease their monthly mortgage payments and potentially save thousands of dollars over the life of the loan.
  • Reducing Monthly Payments: Refinancing can extend the time you have to pay your loan, resulting in lower monthly payments. This can free up cash for other expenses or investments monthly
  • Accessing Home Equity: Homeowners with substantial home equity can tap into it through a cash-out refinance. This allows you to borrow against your home’s value and use the funds for major expenses like home improvements, debt consolidation, or education. Learn more about it down below.
  • Changing Loan Types: Some homeowners opt to change their loan type, such as moving from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. This is to secure stability and predictability in their monthly payments.
Woman hugging man from behind. The couple is relaxing in their kitchen, browsing internet on laptop about mortgage rates and finances

Cash-Out Refinance

A cash-out refinance is a type of mortgage refinance where the homeowner uses the equity of the home and exchanges a larger mortgage rate for cash. The existing loan amount is increased allowing for the difference to be received in cash by the hom eowner. Both refinancing and cash-out refinancing involve replacing the existing mortgage with a new one but the purposes differ for each. Cash-outs are commonly used for financial investments, home renovations, paying off student loans, debt consolidation, or unexpected expenses. A positive outcome of a cash-out is it uses built up equity and provides cash for one to use. A negative outcome of a cash-out is it increases the total loan balance and mortgage payments. To learn more about cash-out refinancing and if it is right for you, visit our Cash Out Refinance page.

Understanding Refinance Rates

Refinance rates are important in the decision-making process when considering refinancing your home. Refinancing rates can impact your monthly interest rates and the total expense of the loan. The factors that determine refinancing rate are current market conditions, credit score, loan to value ratio, debt to income ratio, and more. If current rates are lower than your original home loan rate, refinancing could save you money in the long term. Online calculators and tools can be used to compare rates that suit your specific needs. Our Mortgage Rate Calculator can help in your decision-making process

Calculating Costs to Refinance

Let’s talk about the costs to refinance a home loan. When you decide to refinance your mortgage loan, it’s like giving your mortgage a facelift. But, much like a makeover, it comes with a price tag. This includes various fees such as application fees, appraisal fees (to determine your home’s value), and potentially some closing costs (like attorney fees and title insurance). It’s crucial to consider that while refinancing your home mortgage. It has the potential to save you money in the long run but you’ll need to take these upfront costs into account. Before you begin the refinancing process, it’s important to do some calculations to ensure that the savings outweigh the costs. Using a reliable tool and researching can provide you with a clearer picture of whether refinancing is the right decision for you. 

Refinancing in Summary

In short, refinancing is a process that replaces an existing mortgage on a property with a newer mortgage, that typically benefits the owner of the mortgage. When you obtain a new mortgage, you often lower your interest rate or change your loan terms. Many also choose to cash-out refinance to tap into their home equity.

For more information on how refinancing works and types of refinancing visit the Investopedia Refinancing page.

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VA Loans

What is a VA Loan?

A VA Loan, or a Veteran Affairs loan, is a specialized mortgage program designed to provide financial assistance to eligible veterans, active-duty service members, certain members of the National Guard and Reserves, and eligible surviving spouses to help them achieve home ownership. These loans are some of the most valuable benefits offered to military personnel and veterans, aiming to make mortgages and their current interest rates more accessible and affordable for those who have served. These loans are not directly provided by Veterans Affairs but are guaranteed by the federal government, which means approved lenders are more willing to offer competitive mortgage rates to borrowers who qualify. On top of competitive loan rates, VA loans offer eligible borrowers favorable terms, no down payment, and the absence of private mortgage insurance. These loans are a testament to the nation’s commitment to recognizing and honoring the sacrifices made by those who have served in the armed forces.

VA Loan and Home Buying.

Benefits of VA Loans

VA loans can help you buy your home at a competitive interest rate often without requiring a downpayment or private mortgage insurance, therefore no downpayment is required to achieve home ownership. VA loans often have more lenient credit score requirements compared to conventional loans, making it easier for borrowers with less-than-perfect credit to qualify.

Also, when looking to buy your home, The VA limits the closing costs that borrowers can be charged, reducing the financial burden associated with closing on a home. This helps make home owning easier. VA offers streamlined refinancing programs like the Interest Rate Reduction Refinance Loan (IRRRL), which allows eligible borrowers to refinance their existing and current VA loan to a lower interest rate with minimal documentation and underwriting. 

Do I Qualify for a VA Loan?

To qualify for a VA loan, an individual must typically meet certain eligibility criteria. These criteria primarily apply to active-duty service members, veterans, and some members of the National Guard and Reserves. Generally, a person qualifies for a VA loan if they have served a minimum period of active duty, often 90 consecutive days during wartime or 181 days during peacetime, or they have completed six years of service in the National Guard or Reserves. Additionally, veterans need to be discharged under honorable conditions. Eligibility can also extend to surviving spouses of service members who died in the line of duty or as a result of a service-connected disability. Meeting these criteria allows individuals to take advantage of the many benefits of VA loans, including potentially lower interest rates and no requirement for a down payment. However, specific requirements can vary, and it’s advisable to check with the VA or a qualified lender for the most up-to-date information on eligibility. If you’re still unsure about your eligibility to qualify to receive a low VA loan in your state you can follow this link to a quick questionnaire to get your answer and begin the process within minutes.

How to Apply for a VA Loan?

The first step after verifying your eligibility is to find a VA-Approved Lender: Then, you can choose a VA-approved lender, such as a bank, credit union, or mortgage company. Gather necessary current documentation such as: Proof of income (pay stubs, tax returns, W-2 forms) , Employment verification, Bank statements, Credit history, Debt information, COE (Certificate of Eligibility). After verifying all these documents, you need to complete a loan application along with credit and income verification from your lender. After selecting a home, the VA will do an appraisal, if they approve that, you may move into your new home. With the volatility of current Utah mortgage rates, working closely with a VA-approved lender throughout the process will ensure a smoother and more successful application for a VA loan.

VA Loan Application

VA programs in Utah

Utah is home to a robust range of VA programs and services designed to support its veteran population. The state hosts numerous VA Home Loan Guarantee offices, aiding veterans in securing favorable mortgage options. They specifically offer help for Veteran First Time Home Buying. Utah offers a Veteran First-Time Homebuyer Grant that provides $2,500 to eligible Veterans and current service members (Active Duty, Reserve or Guard) to be used for the first-time purchase of a home in Utah. These programs collectively contribute to the well-being and support of Utah’s veteran community, ensuring they can access the resources and care they’ve earned through their service.

Summary

In summary, VA Loans give eligible former and current service members easier access to housing loans. To those who qualify, they will receive numerous benefits. Including competitive loan rates, favorable terms, no down payment, and the absence of private mortgage insurance. To get a low VA loan, you must find a VA-approved lender. Then, you have to meet the specific criteria for the loan. The criteria for qualifying for these mortgage loans include if you have served a minimum period of active duty, often 90 consecutive days during wartime or 181 days during peacetime, or if you have completed six years of service in the National Guard or Reserves. The other eligibility that needs to be met is dependent on Proof of income (pay stubs, tax returns, W-2 forms), Employment verification, Bank statements, Credit history, Debt information, COE (Certificate of Eligibility). When meeting these requirements, you can finally receive a VA loan. There are also Utah-specific veterans loan benefits that can be applied when purchasing a home for the first time. To conclude, VA loans are a testament to the nation’s commitment to recognizing and honoring the sacrifices made by those who have served in the armed forces.