Whether you are planning to buy a home or build a rental apartment in Utah, it’s going to be in your best interest to find a Mortgage Lender that’s going to get you the best bang for your buck. Making choosing the best mortgage lenders in Utah an Important decision.
When you’re finally ready to buy a home, or an investment property, don’t base the decision merely on interest rates like many mortgage borrowers have done in the past. You’d be surprised by how much more goes into it then just rates alone.
In this post, we take a look at some of the best tips for finding the best mortgage lenders in Utah. Here are some of those important tips to help you in choose your mortgage lender:
1. Tighten your finances
Mortgage lenders in Utah will consider various aspects regarding your personal finances in order to decide whether you can afford to pay off the loan or not. Before you start to approach Mortgage lenders, start by working on your personal finances. Here is a breakdown of the aspects you need to put into consideration regarding your personal finances.
Check your credit score:
The credit score informs the lenders how quick you are with paying your bills. They want to know you’re going to honor your commitment & pay them back. With this being said, I’d strongly recommend having a healthy credit score before going in & applying for loans. It’ll just be all the more reason why they should approve you for a loan!
Pay off other debts:
Do you have outstanding expensive debts? If yes, I’d strongly recommend you pay off those debts to decrease your debt to income ratio. It’s not impossible to get a loan if you’re in debt already, so don’t be discouraged! There are so many different loan types out there for all kinds of situations, it just greatly helps if you have little to no debt to work with.
Start building your savings account:
Most people know by now that it’s industry standard to put 20% down when it comes to home buying. There are loans that only require as little as 3% down, but then factor in closing costs & appraisal of the home & things start to add up real fast. I’d recommend putting some cash away so you can be prepared for that!
By working on the above tips, your personal finances should improve. Now let’s look at some other tips that’ll help you get into your dream home!
2. Understand the different mortgage loan types
When it comes to choosing a mortgage lender in Utah, you need to consider the different kinds of loans they offer. Here’s an overview of the different loans offered by the best mortgage lenders in Utah:
- Conventional Mortgage: this is a loan that is backed by either Fannie Mae or Freddie Mac. The conventional home mortgage can be used to finance residential or commercial properties.
- The FHA Loan: This loan is backed by the Federal Housing Administration, & features more flexible terms. It’s a great option for first time home buyers or those who can only afford a low-down payment.
- Reverse Home Mortgage: If you’re 62 or older, and you have home equity built up in a home, the bank can pay you! The reverse home mortgage requires no monthly repayments, & let’s you deplete the equity in your home so long as you remain in the property till you pass away or move. It’s an excellent option for seniors who need to supplement some Retirement money.
- USDA Home Loans: Also, a great low-down payment loan option. The USDA home loan is a federal program that is designed to encourage investments in the low populated towns.
- The VA Loans: This is a Veterans Administration Insured loan and it is available to the members of the Armed Forces. This mortgage loan allows up to 103% financing to the veterans.
With a better understanding of the above mortgage types, you can choose the mortgage lenders that offer the specific mortgage type you are looking to apply for. Remember that each of the loan types feature some advantages or attractive terms making it an ideal product for you but may also have some catches or things you simply just need to plan for before getting that loan type. Quick Example, for an FHA loan that only requires a 3% down payment, you will have to pay Private Mortgage Insurance in your monthly bill to insure the Mortgage Lenders get paid, BUT, you can always refinance 6 to 9 months down the road once a little equity is built up to get rid of that Private Mortgage Insurance. Just some things to keep in mind!
3. Compare the interest rates
Avoid the temptation of choosing the first mortgage lender you come across. Instead, find out what other mortgage lenders offer and come up with a list of the interest rates that they are charging. Go ahead and shop around for mortgage lenders offering the lowest interest rates. While considering the interest rates, don’t forget that different mortgage types come with different terms and interest rates. For instance, a VA loan has a lower interest rate compared to the conventional home mortgage.
4. Get Competing Pre-Approvals
For each mortgage lender that you investigate, try to get pre-approved by them so you can compare which lender will give you the most bang for your buck. The pre-approval involves performing a credit check and running various financial information to see if your debt to income ratio is “healthy” or safe enough to lend on.
By gathering all this information, you should now be in a great position to choose the best mortgage lenders in Utah!