When it comes to buying your first home, it is vital to understand home interest rates in Utah. First, there are two different kinds of interest rates we can take a look at, fixed vs. adjusted mortgages. Understanding the advantages and circumstances in which fixed interest rates can help you the most can be the best financial decision when you get home. Fixed interest rate is a mortgage loan interest rate the remains the same over the entire course of the loan. This is a consistent option that can make budgeting easier when it comes to long term planning. If you are a buyer that prefers a more predictable financial plan, plan to stay in your home for a long period of time, this is the plan for you. Adjustable rate mortgage (ARMs) is a unique offer than can greatly benefit first time buyers under the right circumstances. ARM’s offer an initial lower interest rate the is adjustable over time. They tend to start with a lower rate compared to fixed loans. However, the rate and monthly payment can change annual after the initial fixed period of time. This is the best option if the buyer is planning to move or refinance within just a few years. This can help buyers save up money within the period of time there is the lower initial rate. It is also important to take these initial rates can also allow the buyer to qualify for a larger loan amount, which can be beneficial in the competitive market Utah has to offer.
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Over the past five years, Utah’s home prices have surged by 72%. In just the two years between 2020 and 2022, the median home prices in Utah saw almost a 50% increase. In June of 2022, prices began to decline. As of February 2024, the median home price in Utah was $542,000. With that comes the minimum down payment at 3% comes to $16,275. The average down payment is 16.4%, coming to $43,488. This number can be infeasible for first time home buyers. Which is why there are first time home buyer programs that exist. The is the conventiional 97, offered by Freddie Mac. With 3% down and a 620 minimum credit score, you are able to stop paying mortgage insurance after a few years. There are no income limits, however, it is meant just single unit residents only. FHA loans are backed by the Federal Housing Administration, requiring 3.5% down and a minimum of 580 credit score. This is a great option of you are rebuilding your credit score or in need of making smaller payments. This loan allows for properties with up to four living units. Lastly, there are USDA loans for those with low to moderate incomes buying in rural areas. Individuals with a 640 credit score, allow for low insurance rates. There is no downpayment required. It is important to get multiple quotes. Go to at least 3 different lenders to find the best rate for you. Your bank may not offer the best rates! Compare your loan estimates, look for APRs, monthly payment rates, locked fees, and closing costs. These are all factors that play into understanding home interest rates in Utah, especially when it comes to being a first time home buyer.
