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Are you a first-time home buyer? Buying a home is one of the largest financial decisions you will ever make! Unless you can pay in cash, you’ll need a mortgage. A mortgage is a loan for purchasing real estate, typically offered by banks with interest rates between 4%-6%. Over 30-year mortgage rates in Utah, these interest rates can significantly increase the cost of your home. The property serves as collateral, meaning if you default on payments, the bank can foreclose and take possession of the home. Understanding the mortgage process can help save time, money, and stress. Learn more about affordability and your rights as a first-time home buyer at: https://www.hud.gov/topics/buying_a_home
The Basics
Principal:
This is the amount of money you borrow. For example, if you buy a home for $450,000 and put down a $90,000 down payment, the mortgage principal will be $360,000. You should put down at least 20% of whatever the total cost of the home is. While you may go as low as 3%, that is not suggested. If you are unable to put down 20%, consider saving a little longer. This website explains FHA loans and how they can help you afford your first home!
Home interest rates in Utah:
This is what the lender charges you for borrowing the money. Local bank mortgage rates can vary based on your credit score, the type of loan, and market conditions. There are many benefits to being a first-time home buyer in Utah, be sure to talk to your bank about opportunities available to you!
Term:
The length of time you must repay the mortgage. Common terms are 15, 20, or 30 years. Now terms go all the way up to 40 years!
Mortgage Insurance Rate:
If your down payment is less than 20%, you may have to pay for private mortgage insurance (PMI). This protects your bank in case you default on your loan.
The Process
There are many different types of loans, and it is important to choose the one that is best for you. As a first-time home buyer, the process can be very overwhelming. If you aren’t sure what is best for you, start here!
Step 1: Pre-Approval
Before you start shopping for a home, it’s smart to get pre-approved for a mortgage. A pre-approval gives you an idea of how much you can borrow based on your financial situation. The lender will check your credit score, income, assets, and debts to determine how much they’re willing to lend. You can do a less formal version of this here: mortgage calculator.
Step 2: House Hunting and Making an Offer
Once you’re pre-approved, you can begin searching for homes within your budget. A great place to start is Zillow. With Zillow, you are able to view thousands of homes from your phone! When you find a house you love, you’ll make an offer to the seller. If the offer is accepted, the next step is securing your mortgage
Step 3: Apply for the Mortgage
Now it’s time to submit a formal application. Your local bank mortgage rates will affect your monthly payments. Your bank will ask for documentation to verify your income, employment, and assets. They’ll also schedule an appraisal to ensure the home’s value aligns with the loan amount. You should also get your new home inspected through a third party to ensure you know the status of the home before purchasing.
Step 4: Loan Underwriting
This is the behind-the-scenes work where the lender verifies all your information, reviews the appraisal, and assesses the risk of lending to you. This stage can take several weeks and may require additional documentation. But mostly, you can sit back and let the bank do the heavy lifting for you.
Step 5: Closing
Once the loan is approved, you’ll go to a closing meeting where you sign the final paperwork and pay any closing costs, which can include fees for the appraisal, title insurance, and legal services. After this, the mortgage is officially in place, and you are a first-time homebuyer!
Lowest Mortgage Rates in Utah
Mortgages may seem complex at first, but understanding the basics can make the process less intimidating. When comparing options, look for the lowest mortgage rates Utah and consider if your Utah mortgage rate chart aligns with your financial goals. Some banks offer the lowest mortgage rates, especially those with programs aimed at first-time home buyers seeking the best interest rates.
You may also want to explore federal housing association (FHA) rates Utah or (FHA) mortgage rate in Utah, as these can be beneficial for buyers with lower credit scores or smaller down payments. Understanding 30-year mortgage rates in Utah and how mortgage insurance rate impacts your overall costs is key when making such a big decision.
