Here’s How to Buy a House in Utah Even With Bad Credit!

Do you intend to buy a house in Utah but you have a poor credit score? While it is easy to get rid of a couple of blemishes on your credit report, the dream of buying a house is one you should never give up on. For first time homebuyers with a bad credit score, how long it will take to buy a house in Utah is one of the questions to seek answers on. Well, the time it will take to purchase a home if you have a poor credit score depends on the strategies you put in place.

In this post, I present some important tips to help shorten the amount of time it takes to purchase a home even when you have a poor credit score.

1. Consider the Mortgage Options For Borrowers With Low Credit Score

For the borrowers with a low credit score, the dream of owning a home remains a valid one! This is through the mortgage options for borrowers with a low credit score. The federal government has put in place multiple loan options for the borrowers who end up with a low credit score. Thus, if you cannot qualify for a conventional mortgage, you may approach your mortgage lender and negotiate for either of the following mortgage options:

  • The FHA Home Loan:

The FHA home loan was established under the National Housing Act, with the aim of stimulating the housing market. This is through enabling citizens who cannot afford a huge down payment and have a lower credit score. As of 2020, new homebuyers qualify for up to 96.5% of the property value, under the FHA home loan so long as the credit score is at least 580. Thus, if you cannot qualify for a conventional home loan since your credit score is below 620, you may try the FHA home loan.

  • The VA Home Loan

For the veterans, active-duty military, and the National Guard members, the VA home loan is a viable mortgage option. The VA home loan sets no minimum credit score requirement, enabling the qualifying first-time homebuyers to apply for the mortgage.

  • The USDA Home Loan

The United States Department of Agriculture designed this product for homebuyers who cannot afford a traditional home mortgage. However, the USDA will only provide the mortgage to the borrowers looking to purchase a home outside the already crowded metropolitan areas. Some mortgage lenders will go as low as 580 for USDA home loans.

Have applied for a conventional home mortgage but you got a negative response because of your current credit score? Choose either of the above options to fast track your journey of homeownership.

2. Be Willing To Accept A High-Interest Rate

Waiting for your credit score to improve may mean that you will not be able to purchase a home anytime soon. If you do not want to wait for a longer period, you may have to contend with the requirement of paying higher interest rates compared to the amount charged for a conventional home loan. In some instances, those with a poor credit score will pay double the rates that a consumer with a high credit score pays. To cater to the difference in credit score, you may have to settle for a less expensive property.

3. Make a Huge Mortgage Down payment

Another option for mortgage borrowers with a poor credit score is paying a huge mortgage down payment. Talk to your mortgage lender and let them know that you are willing to deposit a huge amount in the form of down payment. The mortgage lender will calculate the minimum down payment amount based on your credit score. While this may be a viable option, you may have to pay a high-interest rate on the mortgage. Choosing to pay a huge down payment along with a high-interest rate is a common approach for the mortgage lenders with a poor credit score.

4. Work on your Credit Score

If neither of the above options seems to work for you, it is time you consider working on your credit score. Getting out of the blacklist requires strict financial discipline. In that regard, you need to work on a plan of repaying outstanding debts. Upon clearing the debts, you can then start rebuilding your credit score to the acceptable limits.

A poor credit score can be a huge setback when it comes to buying a house in Utah. However, with the assistance of a reputable loan officer, you can quickly find a mortgage option that can help you purchase a home sooner. Options like the FHA home loan. VA home loan and the USDA home loan have helped borrowers with a poor credit score attain the dream of homeownership within a short period. Talk to a mortgage lender today!

How to Buy a House with Low Down in St. George

Do you think it is impossible buying a home without a 20% down payment?  Maybe not, if you understand the lending industry well. Certain mortgages and home buying programs allow home buying with a low down payment or no down payment at all.  Therefore, with as low as 3% down or less, you can become a happy homeowner.

A no down payment mortgage allows first time home buyers and experienced home buyers to purchase a property with no money required at closing except the standard closing costs.  In this post, we feature important options allowing you to buy a home with a low down payment or zero percent down.

Let us start with the low down payment options:

1. The FHA Loans (Low Down Payment at 3.5% Down Payment)

The Federal Housing Administration (FHA), introduced FHA insured loans, available to qualified individuals through mortgage lenders. The FHA low down payment mortgage intends to help the low and moderate-income earners, who would otherwise be locked out of the housing market.

Thus, with a 3.5% down payment and at least a 580 credit score, you can borrow the low down payment mortgage by FHA. However, the drawback is that you need to pay an upfront mortgage insurance premium of 1.75% of the loan amount. In addition, a monthly mortgage insurance premium is included in the mortgage repayments. This could range from 0.45% to 1.05% of the loan amount per year.

Why choose the FHA home loan? Here are some of the reasons you may need to consider the FHA backed home loan with a low down payment.

  • Comes with a low down payment of just 3.5% down
  • Features flexible qualification guidelines
  • A debt-to-income ratio as high as 55%
  • Requires upfront and monthly mortgage insurance premium
  • Enjoy a no cost and no qualifying streamline refinance

Apply for The FHA Home loan today.

2. The VA Loan –No Down Payment Mortgage

The U.S. Department of Veteran Affairs offers zero down payment home buying loans to the members of the U.S. military and the surviving spouses.

The VA guarantees these loans and avails them through various lenders. Thus, if you are an active or a retired military officer, or a surviving spouse, with the VA zero down payment mortgage, you can buy a home.

The VA home loans do not have a minimum credit score, but the VA mortgage lenders may require that you raise at least a 580 credit score. As illustrated, the zero down payment home loan comes with flexible credit terms, with phenomenal interest rates compared to other home loans. Unlike the FHA home loan, borrowers do not have to pay a monthly mortgage insurance premium. The VA loan also comes with two refinancing options.

Here is a summary of some of what you need to know regarding the VA home loan:

  • It is a zero down payment home mortgage
  • Borrowers pay the VA upfront funding fees but there is no monthly mortgage insurance
  • It is available to the eligible veterans only
  • Enjoy “no-cost” and “no qualifying” streamline refinance
  • Available for 30-years fixed rate

If you intend to apply for this zero down payment mortgage, note that the VA home loan is subjected to the VA eligibility rules

3. The USDA Home Loan- No Down payment home buying mortgage

Available through the U.S Department of Agriculture, the USDA home loan offers up to 100% financing to eligible homebuyers. The USDA home loan program is formally known as the Section 502 mortgage although most lenders call it the Rural Housing Loan.

The USDA rural housing loan is available to the homebuyers eyeing the suburban neighborhoods and aims at reaching the low-to-moderate income homebuyers. With the USDA rural housing program, the borrower may include eligible home repairs and home improvements in the loan amount. In addition, there is a maximum home purchase price while the guarantee fee is added to the loan balance at closing. The USDA home loan carries a lower interest rate compared to a conventional home loan.

Here are some of the advantages of the USDA no down payment home mortgage

  • Comes with a low monthly mortgage insurance
  • Available for 30 years at a fixed rate
  • Allows buying of properties within eligible rural areas
  • Comes with flexible qualification guidelines
  • Enjoy financing of up to 103.5% of the appraisal value

The USDA home loan requires an up-front guarantee premium while the monthly mortgage insurance premium is low. Note that the maximum income limits will vary by country.

Key Takeaway

With millions of Americans facing financial burdens that include student loans and high unemployment rates after the Coronavirus pandemic, raising a 20% down payment can be daunting. The good news is that buying a house in St. George is still possible. This is through taking advantage of the no down payment or the low down payment home mortgage.

Home Loan

Buying Vs Renting a House – Which is More Profitable for First-time Owners?

Housing is one of the important decisions we have to make in life. For a majority of first time owners, home rentals vs. buying a home are the popular decisions to make. Buying vs. renting a home, which of the two offers more benefits to first-time homeowners? To answer this question, it is necessary we evaluate the pros and cons associated with either of the two.

Home Ownership

Owning a home is one of the biggest financial decisions in life. For millions of Americans, homeownership is a dream come true. Here are some of the benefits you will enjoy if you choose to buy a home.

  • A House is a Long-Term Investment

Buying a home translates to investing in an asset for yourself rather than for the rentals proprietor or the property management company. Ideally, even where the value of the structure may depreciate over time, the value of the land in which the property sits will appreciate. In that regard, owning a home is considered a better investment.

  • Home Ownership Creates a Chance to Build Equity

The chance to build equity is one of the significant benefits of choosing homeownership as opposed to home rentals. Ideally, equity from owning a home is the difference between the market value of your property and the mortgage balance. Therefore, if your property is increasing in value, your equity keeps growing. This is the reason why many Americans consider homeownership to be the best approach for increasing their net worth.

  • Homebuyers Enjoy Federal Tax Benefits

Did you know that mortgage interest is deductible from your federal tax due? This is by the virtue that mortgage interest is classified under the same class as home equity loans, property taxes, and closing costs when buying a house. Therefore, the first time homebuyers who itemize tax deductions can reduce their taxable income by deducting the interest that they pay on the home mortgage. On the other side, home rentals do not provide a comparable opportunity.

  • Homeownership Means Greater Freedom

Homeowners get a chance to renovate the property to their liking. This is unlike renting a home where you cannot make any additions to the house.

However, the benefits of owning a home do not come without costs. Here are some limitations you will have to cope with if you choose to buy a home.

  • Involves a High Upfront cost

Compared to renting a home, buying a home requires a high upfront cost in the form of closing costs, down payment, and numerous fees associated with mortgage processing. Recovering these costs can take many years, and this is often seen as the main barrier to owning a home.

  • Comes with Less Mobility

For homeowners, moving from one city to another is not as easy, as it is for those who prefer to stick into rent cycles. Thus, in case of a more attractive job offering, it is not easy for the homeowners to pack and leave.

  • Property Maintenance

Homeowners have to pay for property maintenance, unlike renting a home where property maintenance is the responsibility of the property owner. For renters, all they need to do is writing to the property owner or the property maintenance company so that they can have the issues fixed.

  • There is no Guarantee Property Value Will Keep Rising

In 2008, the nationwide housing crisis caused the value of properties to fall. This was a big loss for homeowners looking to sell their properties. the structure will depreciate over time, especially where you are struggling to pay for its maintenance.

Therefore, if you are intending to purchase a home, you are informed of the pros and the cons to expect. However, homeownership is not for everybody. Some people will prefer paying monthly rent as opposed to purchasing a home. Here are some advantages that come with home rentals.

  • Low Initial Cost

Compared to buying a home, rentals require a lower initial cost. This is in the form of a property deposit and the cost of moving. The initial cost is lower, compared to closing costs and paying a property down payment.

  • Property Maintenance is Not a Tenant’s Responsibility

The tenant will not have to make any arrangements to have the property repaired. The property management company will handle the responsibility on behalf of the tenants.

  • Monthly Rent May be Lower

The monthly rent is lower compared to mortgage repayments. Thus, if you cannot afford mortgage repayments right now, renting a home is the cheaper alternative.

Here are some limitations of renting a home.

  • You Cannot Renovate the Property

To make any changes to the property, you have to seek the approval of your landlord. Even where you speak to the property owner regarding renovations, he or she may put some restrictions on how far you may go.

  • You Aren’t Building Equity

You are paying monthly rent cycles, but this does not translate into building equity. All you are doing is repaying someone’s mortgage and facilitating their equity building.

Comparatively, purchasing a home is a better decision if you are looking to build equity, seeking to have a permanent address, and you want to make a long-term investment.

Home Buyers in Utah

The Big Difference Between Home Rental Values and Sale Values…and Why It Matters

When investing in real estate, the investor must evaluate the options to earn a decent profit. For instance, one has to choose between renting the property and selling it. Thus, you may want to know how rental value compares to the sale value. In this post, we want to look at the property rental value vs. sale value. By looking at the pros and cons of the two, you can make a wise decision. Keep reading to discover how home rental value and sale value relate to each other.

Home Rental Value

By definition, home rental value refers to the fair market value of the property is rented out in a lease. Ideally, the rental value maybe the consideration that is paid under the lease for the right to occupy or the return that is received by the property owner under the tenancy agreement.

The home rental value does not just refer to the total value or the highest price you can list the property at. Remember that overpricing the rental property with an intention of earning maximum as the rental value could result in issues as tenants complain about hiked rental prices.

By renting a property, the property owner earns from the monthly rent cycles. Thus, the rental incomes become the annual cash flows and so the fundamental basis for determining the overall home rental value.

Property Sale Value

For the home sale value, this refers to the amount earned from selling the property to a willing buyer. Ideally, the sale value is based on what the market, or the buyer, is willing to pay for the property.

To answer your question on how the home rental value relates to the home sale value, we can say that the rent value, the property owner earns from the monthly rent cycles. For the sale value, you get a once-off payment from the value that the buyer agrees to pay for the property.

Now that we understand how home rental value compares to the home sale value, let us now look at the factors that determine the home rental value and the factors that determine the home sale value. Keep reading to discover.

What Determines the Home Rental Value?

1. Net Property Worth

Often than not, property appraisers use the overall property worth to calculate the base rent value. The approach is especially useful when renting out a property that you have been living on, as you need to know the true face value of your home. Thus, it is recommended that before getting into the home rentals business, you seek assistance from the property appraisers who should be able to calculate the property worth, to guide you when calculating home rent value.

2. The Local Rent

How much do most landlords in your locality charge as rent? While comparing the rent amounts charged by the other property owners, it is important you ensure that you are comparing properties that are similar to yours. Thus, if you are renting out a single-family apartment, you cannot compare it to a studio. This is the worst mistake made by property owners.

3. Consider Demand

Despite the property worth and local rent, the home rental value will change depending on the current demand. If the demand is high, then the rental value will increase, and vice versa.

What Determines the Home Sale Value?

1. Using the online valuation tools

There are dozens of property valuation tools available online. Ideally, the home value estimators will request that you key in different variables that are used for calculating the house worth. However, if you choose using the online valuation tools, it is advisable that you go for the professional-grade property valuation tools.

2. Comparative Market analysis

The comparative market analysis is what has long been used for calculating the property sale value. However, the method is not as detailed as using online cost calculation tools. Make sure you involve an experienced agent, to get a comprehensive list that you can use for the comparisons.

3. Using the Federal Housing Financing Agency

 The Federal Housing Financing Agency uses a more scientific approach for calculating the property sale value. This method uses the repeat sale method to estimate the property value within a given market.

We have covered the essential aspects you need to know when it comes to home rental value vs sale value. thus when making important investment decisions, you will have a clue of what either of the two options holds.