No Cost Loan vs. No-Cost Refi
First off, lets make this article a bit shorter and easier for us to get through. The concept and process for a No Cost Loan and a No Cost Refinance are the exact same. Both were created to accomplish the same goal… NO COST TO YOU OUT OF POCKET! If the market is really dropping down and taking the rates with it, get a No-Cost Refi. If the homebuying market is out of control and everyone is looking to buy a home, then get yourself a No Cost Loan. No-Cost products are an always and forever product. They’re never out of style.
How does a No-Cost product work?
No Cost loans are a huge factor for companies to offer. Why? Because they can advertise the crap out of them. What is the number one most appealing thing to humans? Any guesses? …. FREE stuff!! Freebies, swag, “on the house”…., you get it. Knowing that it is built into human biology is going to make advertising that much easier. If you’re ‘buying’ a loan, would you rather pay for it or get it free? Of course we’ll take it for free. For some, you jump right in and take the loan, others may ask themselves, “what’s the catch?”. Let me help you understand “the catch”, so you can decide if it’s a negative or positive one. Spoiler alert, it’s a positive one!
What's the catch?
The catch is more of a trade off than a catch. Example, if you were to get a loan with a 4% Interest Rate, you may have $5,000 is closing costs. For that same loan, you could opt into a “No Cost” loan. This would take care of that annoying $5,000 you don’t want to pay in closing cost BUT your new Interest Rate will be 4.25%. Its all a game of moving money around. In the end, you’ll pay that $5,000 one way or another. The first scenario you will pay it up front and get it out of the way while having a lower payment. For the No-Cost Loan you will be paying that over the life of the loan through a higher interest rate.
“The Catch” should not be looked at as negative, it is a positive one. It can really help people that have no problems making monthly payments, yet, don’t make quite enough to save up a chunk of cash to put down for a home. For others, even if you have a down payment but could but that cash to better use elsewhere, it gives you’re the option to pay a little bit more each month to do so. Countless times our loan officers have given second bids/quotes to home buyers to see if we could save them money. Not only have we offered far better rates, we end up offering them a No Cost Loan with a rate that either beats or is equal to the rate of their previous standard quote. It’s safe to say, these loans are incredible products and can possibly get better with different situations.
How the heck do I get one?
All you need to do is give us a call, tell us your current home buying scenario, then let us take it from there. We will be able to run through a few different loan options and make sure to get you the best products for you to choose from. Whether you’re looking to build a new home, buy a condo down at City Creek, or purchase an existing home. ALWAYS get a quote from another mortgage lender to make sure you’re fully satisfied and taken care of.
Utah Mortgage Rates, Mortgage Rate Utah, Mortgage Rates Utah
These are among the top searches on Google relating to mortgages for the state of Utah. What's the reason for this? Would rate be the most important factor? Is there a difference between interest rate and Annual Percentage Rate (APR)? Do Conventional, FHA, VA, USDA, ARM’s, & Jumbo loans have better rates than each other or are they all the same? Let’s dive in and see what we can clear up for you about the broad search and find out if it’s a search you should be making when shopping for the best ‘Utah Mortgage Rates’!
Is there a reason why?
The answer to this is an ASTOUNDING yes! The rate you have for a mortgage directly affects your monthly payments. I mean, what makes a mortgage better than having the lowest possible payment? The lower your payment the more money you get to spend on yourselves! Also, as a quick “ballpark” style example, some people will buy a $250,000 home and end up paying close to $438,000 or more for it! Buying a home is a HUGE commitment and you want to make sure to not just consider one item, but to consider the whole life of the loan.
Is rate the most important factor?
I’m going to jump to the next question first to clarify the two types of rate and then we’ll come back to this.
Is three a difference between interest rate and annual percentage rate (APR)?
Yes, yes, and yes. Absolutely there is a difference. Quite honestly, there is a HUGE difference between the two and it could save or cost you thousands and thousands of dollars
Let us start with Interest rate. The interest rate is simply the amount of interest that the lender will charge you for using their money to finance your home. If you borrow $100,000 and have an interest rate of 5%, then you would end up paying $5,000 a year (paid out evenly with your chosen mortgage payment schedule) just in interest. So, after 30 years, interest alone would end up costing you $5,000 a year x 30 years = $150,000. Over the full life of the loan that is a huge amount.
The biggest factor will be the interest rate. Looking at the example above, you can see how much money is paid just by the interest accrued on the financed amount alone.
Next there will be closing-costs. Closing costs can vary from broker to broker and lender to lender. In general, they will include Origination Fee, Title Fees, Appraisal Fee, Underwriting Costs, Processing, and Credit Report Fee. After all of these are added up the final closing costs will include any Loan Discounts or Lender Credits that you may receive.
So, is rate the most important factor?
Back to this question. The answer is yes. The ONLY answer is YES. Depending on the type of loan you’re getting, you may find yourself focusing more on Interest Rate over APR and other times and situations you will look at APR over Interest Rate. As an example, home buyers that need a down payment assistant programs may find themselves “handcuffed” with a higher interest rate. I don’t phrase it this way to have any negativity attached. In this situation, the home buyer will be tied to whatever programs are available and will have to stick to those to ensure they can achieve their dream of home ownership. This way of shopping for homes will end with buyers looking for the lowest Interest rate.
On the other side of the coin, we could find ourselves working with a home buyer that may have just sold a home. Now, they have cash for a large down payment, which can make for far friendlier interest rates and far more programs at their disposal where they can pick and choose what best fits them and what they are most comfortable with. Along with this route, these buyers are going to be far more interest in a favorable APR.
As an industry wide consensus, APR is the easiest and best way to compare rates between companies for any loan. (Side note, APR came about in conjunction with the Truth In Lending act to protect borrowers from deceptive sales practices. APR was made for the sole purpose of letting borrowers know the total cost of the full life of a loan.) We will end this with a quick back up plan for comparing companies with a scenario.
To the average homeowner, to "buy down" rate may not be something they fully understand. If you offer a lower interest rate to win their business, they may have no idea that part of their closing costs are going to include an unnecessary “loan discount” (which is actually a cost, it’s a purchased discount, not a given discount). An example of this would be a consumer buying down rate on the purchase of their $250,000 home. If the loan officer wants to “match” another competitor they may have to drop .5% in rate, which costs 2 points (1 point equals .25% of rate) to the consumer to get that. This will end up being an additional $5,000 in closing costs. That is a HUGE chunk of money that you’re now on the hook for.
That being said; the backup plan to is to compare 2 items and choose the better option, Interest Rate and Closing costs. There are various items that some, ethically challenged, loan officers may be able to manipulate. Interest Rate and Closing Costs are both items in which they cannot change, ever.
Do Conventional, FHA, VA, USDA, ARM’s, and Jumbo loans have the same rates?
No. Each type of loan will have an interest/annual percentage rate attached to it. Some loan are built to have a lot larger costs associated with it to ensure the loan can happen. A common scenario would be Down Payment Assistance programs (DPA’s). These programs have higher than average interest rates but offer lower costs to a borrow to get into a home. If your budget allows you to spend $2,000 on a mortgage but only $500 for savings. You may find yourself in the situation to cover a monthly cost of a home, but no savings for down payment. DPA’s could be a $100 or more a month in mortgage payments but have little to no money down.
On the other hand, you could have a consumer who has budgeted $1800 a month for a mortgage payment and $1,000 to savings. You may find yourself in the situation to cover the down payment for a home but not as much money to cover a large monthly mortgage payment.
Both result in a family being happy that they have a new home to live in. Each scenario had a different program that would benefit the home-owner and each came with a different rate but ended with payments each family could afford for a similar home.
Utah Mortgage Rates, Mortgage Rate Utah, Mortgage Rates Utah
To sum this up, I think it may not matter what you type into google, it will come down to which Loan Officer you end up working with. Start with a referral from someone you trust that has had a good experience with a Loan Officer. Let them talk you through the home buying process and recommend which loan they think will fit closest to your needs. Once that is done, start your quoting journey started and get a quote from him/her!
We always encourage our clients to get a quote or two from another lender or bank. (If your lender guides your away from this that is a HUGE RED FLAG and I’d recommend thanking them for their time and move on). We do this so home buyers will cover their bases and give them comfort once they make their final decision. At the end of the day, your comfort and happiness are the most important thing to a Loan Officer.
Buy now, pay later. These four simple words sum up what can be a complex subject: credit. Anytime you obtain goods or services with the agreement to pay for them at a later date, you are making use of credit. This could be paying via credit card, on a store account, or even your electric or water bill where service is provided first and invoiced after the fact.
Credit is central to the mortgage industry. A mortgage loan is a large extension of credit, generally this is the largest credit extension anyone will ever have to deal with, basically loaning funds to purchase a piece of real estate or a home.
Because of the scale of the transaction and the amount of credit provided, a thorough process is put in place to determine a your credit worthiness. A store credit card can often be opened on the spot, in a few moments at the register. A mortgage loan however, involves careful and thorough review of credit history, finances, and more – a process which can span a few weeks.
It’s not uncommon for there to be confusion surrounding credit reports, scores, and the impact it all plays on getting approved for a new loan.
UNDERSTANDING CREDIT REPORTS & SCORES
Your credit report is a snapshot of your credit history and current credit accounts. Your credit score is a numerical representation of your credit worthiness, or how well you have handled credit in the past.
Why is this important? Providing financial loans is big business. Banks, credit unions, mortgage lenders and more, loan funds to consumers and are able to make a profit by charging interest. The borrower agrees to repay the amount borrowed over time, plus some additional percent of that amount. The consumer benefits by being able to purchase the goods or services they want or need now, and pay for them slowly over time.
If the borrower is unable to repay the loan as agreed, the lender will generally incur additional costs related to seeking to collect on the debt, legal fees, repossession or foreclosure, or even writing off the unpaid amount. It’s likely that the lender would lose money on this transaction, and the borrower can experience the stress of not being able to pay the amount owed, potentially losing the items purchased, and see a negative impact on his or her credit report. Therefore, it’s best for all involved when the payments on a new loan are manageable for the borrower.
One great indicator for how a new debt will be managed is how other loans have been repaid previously. This information is captured on the consumer’s credit report.
Your credit score is a numerical representation of your credit worthiness, or how well you have handled credit in the past and can be expected to in the future.
BREAKDOWN OF THE CREDIT REPORT
1. Information that identifies you
The report starts with items such as your name, address, previous addresses, Social Security number, birth date, and employers. This helps creditors ensure they are looking at data associated with the correct individual.
2. Credit Accounts
Next, open lines of credit will be listed, such as credit cards, car loans, and mortgages. Information will be included about the type of account, how long you have had the account open, the credit limit, the current balance, and payment history. If you have had any late payments your credit report will show how many times the payment was late as well as the number of days late.
3. Inquires for new credit
A list of who accessed your credit report and why over the previous two years will be included. If you have applied for a new account it will be listed here as a voluntary inquiry, and if a lender has purchased access to your credit information in order to send you an unsolicited “pre-approved” offer it will show up as an involuntary inquiry.
4. Collections & Public Records Information
Overdue debts in the hands of collections agencies will be listed on your report. In addition, data from the public records of the state and county courts if applicable. This could include items such as bankruptcies, foreclosures, judgments against you, liens, or wage garnishments.
Good Credit & Bad Credit
The terms “good credit” and “bad credit” are often tossed around, but it’s tough to draw a line between the two. A high credit score and positive credit report will likely mean greater access to credit accounts, and better terms. An extremely low score might make you ineligible for new credit accounts until your credit is repaired over time. In between is a large sliding scale.
A. Qualifying for credit
The minimum credit score will vary by program and type of credit. It’s also important to understand that for more complex financing such as a mortgage, the credit score is only one of many qualifying factors. Others may include monthly income, amount in savings, employment status, property value, equity position, and more.
B. No credit history
If you have never used credit it’s possible that you don’t have an established credit history or score. This is common among young consumers or consumers who prefer to deal primarily with cash, checks, and debit transaction.
Want to establish credit for the first time? Consider a secured credit card or a store credit card which are generally easier to be approved for. Actively use the card, never spending more than you can afford to repay, and be sure to pay the bill on-time every month.
College students will likely find that they are inundated with offers for credit cards, and this can be a good way to establish credit. They tend to have lower credit limits & higher interest rates when compared to offers available to consumers with more established credit. It’s important to keep a close eye on the balance, never charging more than the limit, and ideally paying the balance off each month.
Strong credit can provide access to funds when you need them, at attractive terms that can help you improve your financial position. If you’d like to improve your credit and raise your score, there are several things you can do. Things might not change overnight, particularly if you have a long history of negative items on your credit report, but over time you should start to see things moving in the right direction.
1. Check your credit report for errors
The credit reporting system isn’t perfect. From time to time an account will get recorded on the wrong report or incorrect data will be included. If you have a very common name it increases the likelihood of this happening, and it’s not unusual for family members with the same name (Jr, Sr, III, etc.) to have each other’s accounts or items appear on their reports.
Check your report thoroughly to be sure that everything on it is accurate. You can get a free credit report from each of the three major credit bureaus (without a score) once a year by going to annualcreditreport.com . Some consumers check one every four months on rotation so that they can identify any errors or issues more quickly.
If you identify something you think is incorrect file a dispute with the credit bureau on their website, and contact the company or organization which reported the information.
2. Pay all your bills on-time
Late payments can damage your credit, particularly when paying late frequently or being more than 30 or 60 days overdue.
Create a monthly budget so that the money is there when you need it to pay your debt obligations. Setup reminders via email or on your smartphone to alert you to upcoming due dates. You can also setup automatic payments, just be sure that the bank account those payments will be withdrawing from has sufficient funds to cover them.
3. Pay down your balances
Owing a large sum relative to the amount of available credit can hurt your scores. Work to lower the balances on revolving credit lines. Consider paying a little extra each month to these accounts, and incorporating this in your monthly budget.
Should you pay off an account completely, don’t close it. Having that available credit can help your scores increase, while closing the account could have the opposite effect. If it is a credit card, use it for a small charge or two every few months. If you never use the card, you run the risk that the credit card company will close the account for lack of use.
4. Talk to your creditors
If you’re having trouble meeting all your financial obligations each month reach out to the companies you owe money to. Whether it’s a temporary hardship such as a job loss or illness, or some other factor, they may be able to help. Your mortgage servicer or landlord may be able to offer some relief in the form of a reduced payment for some period of time, or some other solution. If this alone does not do enough to make monthly expenses manageable seek assistance from a reputable credit counselor.
5. Don't open new credit accounts
When working to rebuild your credit try to avoid opening new credit accounts. If it’s necessary to take out a new loan, for example a used car loan, try to do your shopping for that loan within a short period of time. This is because the credit bureaus understand that you are shopping for the best deal on your new loan, and don’t penalize you for this. However, if you have a different auto dealer pull your credit every few weeks for several months, this could negatively impact your credit.
SAFEGUARDING AGAINST CREDIT FRAUD AND IDENTITY THEFT
After working hard to build up a solid history you want to keep it safe. Protect yourself from financial harm and a major hassle by reducing your risk of credit card fraud and identity theft.
Credit card fraud precautions:
1. Keep credit cards in your possession
The simplest type of theft involves physically taking your credit card and then walking into a store to use it. Don’t leave your cards (or receipts or statements with the account numbers) unattended in your home or office. Keep your wallet or purse on your person when out. Lock it your office or in a drawer when at work. Don’t let anyone borrow your card.
2. Review your transactions
Keep receipts for your purchases and compare them to your statement, looking for any discrepancies.
3. Report fraudulent charges
If you see unfamiliar charges on your statement or when reviewing your account online let your credit card issuer know immediately. Credit card theft can happen any numbers of ways, and criminals don’t need physical contact with your card.
4. Report a lost or stolen card
As soon as you realize you are no longer in possession of your card notify the card issuer. If you are not sure whether the card is really lost it’s better to be safe and report it as lost. If it turns up you can shred it and wait for the replacement to arrive.
5. Don't give your credit card number over the phone
If you get a call, supposedly from your credit card issuer, hang up and call the toll free number on the back of your card or on the company’s website to ensure the call is legitimate. Only make purchases from organizations you trust via phone or online.
Tip: Check to be sure the website is secure and that the url begins with “https”.
6. Carefully dispose of anything with your credit number on it
When you no longer need expired or replaced cards, credit card statements, or receipts shred them before disposing of them. You can purchase a small, at home shredder, or take items to be shredded to a reputable business that offers this service. You should be able to put your documents into a locked box to be picked up by the shredding company, or watch the employee put them in.
Identity theft safeguards
While credit card fraud can be very frustrating and inconvenient, identity theft can cause serious and long-lasting ramifications on a whole other level. Identity theft goes beyond just stealing your money, and involves stealing your information and impersonating you. Criminals can get personal information in a number of different ways, including:
Once the information is obtained it may be used to open new credit accounts, file a tax return, apply for a passport, make insurance claims, and more. There are many ways you can protect your personal information. Depending on your level of concern and perceived risk you can choose which steps seem best.
1. Guard your personal information
Don’t carry anything with your social security number written on it on your person. Be wary of people asking for your SSN, account information, or other sensitive information over the phone, email, or online. Cover the ATM keypad when entering your PIN if others are waiting behind you in line
2. Take precautions when using technology
Use strong passwords and change them periodically. Don’t use the same password for everything. Store your passwords in a safe place both at home and at work. Make use of virus protection software on your computer. Don’t use a public computer such as at the library for online banking or other sensitive transactions.
3. Protect your mail
Collect your mail as soon as you can after it’s been delivered. If you’re going away from home for an extended period of time, have the post office put your mail on hold. If you are especially concerned you may choose to have your mail delivered to a post office box accessed only by key. You can also purchase a locking mailbox where items can be inserted via a slot.
Shred any paper with sensitive information on it such as receipts, offers for credit, statements, and expired cards. If you prefer to simply not receive these “pre-approved” offers, you can opt out (choose from a period of five years or permanently) by visiting optoutprescreen.com .
4. Keep an eye on statements and your credit report
Look for transactions or accounts you don’t recognize, and should you identify something, take action right away.
5. Freeze your credit
You can contact each of the three major credit bureaus and request that they place a freeze on your credit. Should you decide to open a new account you will need to temporarily lift the freeze.
Quickly Take Action
If you believe you have been the victim of identity theft it’s important to take action right away. Depending on the type and severity of the theft you may want to:
1. Contact local law enforcement
If you believe that you or anyone else’s safety is in danger, reach out to your local police.
2. Call any companies involved
If a credit account was opened in your name that you did not authorize contact the issuer.
3. Place a free fraud alert with the credit bureaus
Contact Experian, TransUnion, or Equifax to place the fraud alert – whichever you contact will notify the other two bureaus. This will make it more difficult for the criminals to open new fraudulent accounts.
4. Carefully review your credit report
Get a free copy of your credit report from each of the three bureaus listed above (available once a year at annualcreditreport.com ) and thoroughly review them for any accounts or items you were not responsible for.
5. File a report with the federal trade commission
Visit identitytheft.gov to enter your information. This will help you learn the next steps to take and may potentially help the Commission protect others from being a victim of a similar crime.
6. Sign up for a credit monitoring service
If your information was stolen from the records of an organization, they will often provide you with this service for free. Otherwise you may choose to obtain it on your own.
Credit can influence many aspects of your life like renting an apartment, financing a car, or applying for credit cards. Your credit plays a major role in the home-buying process and making small adjustments to your spending habits before starting the application process can help you get credit ready to buy.
Credit is not where you’d like it to be? Don’t get discouraged. Credit can always be improved over time and loan varieties have greatly increased as consumers look for unique solutions to their financing needs. This means that consumers have more choices than ever when it comes to purchasing a home.
Utah Mortgage offers a variety of programs with flexible options for clients with less-than-perfect credit. For more information on this topic, reach out to an Utah Mortgage Home Loan Advisor!
Whether you’re bored with your abode or want to increase its value with home improvements, remodeling can not only renew your interest in your home, it can also make every one of your rooms more functional. If you’re in need of a change, here are 5 reasons to remodel your home:
1. It's Often Cheaper Than Moving
Extending or re-configuring the layout and updating your current property could essentially provide everything that a new build property could offer at a much lower cost.
2. Add Value to Your Home
Did you know that a minor kitchen renovation can add an average of $15,000 to your home value? A major kitchen renovation adds about $40,000 to the resale value!
3. Make It Your Home
Customize your home to meet your needs and desires. Renovating simply makes more sense! A kitchen remodel, or a bathroom renovation makes your home a more enjoyable place to live and are a few of the features sought by today’s home buyers.
4. Cost Efficiency
One major trend today is making your home more eco-friendly. Adding solar roof tiles, for example, is not only good for the environment but also good for your wallet.
5. Earn While You Learn
Potential buyers will compare your home to those being newly built; therefore, you’ll want to look at the design trends and amenities being built into new homes.
What are exactly are renovation loans?
Considering a distressed property, fixer-upper, or a home in need of some repairs? Homes that need a little work or updating can often be a great bargain that can be a great investment, but some potential buyers shy away from these deals, afraid they can’t afford an out-of-pocket expense for renovations.
Renovation Loans allow for financing of the purchase price as well as the cost of repairing or renovating several elements of the home in one mortgage loan. From small repairs to large ones, there are many options to fit your specific needs.
Benefits of renovation loans
The average person spends a third of their time in bed. If you’re spending that much time in a room, it’s important to feel comfortable in this space. Your bedroom is the place to look forward to after a long day at work.
According to the 2017 Houzz & Home Study, the average mater bedroom remodel spend is $3,500. To compare, kitchen renovations cost around $28,000.
Some ideas for upgrades include a fresh coat of paint, wood flooring or plush new carpet installation, a California king-size bed with luxurious linen, updated headboards, personalized art work, or something simple like replacing old dresser drawer handles.
So what are you waiting for? This weekend can provide the perfect opportunity to transform your bedroom into a calm and inviting haven.
FHA Repair Escrow 203(b): For purchasing a home directly from HUD that needs cosmetic repairs not to exceed $35,000
According to the 2017 U.S. Houzz Kitchen Trends Study, increasing family time, home cooking and entertaining are the top three reasons for kitchen renovations. We couldn’t agree more! Whether it’s used for baking cakes with the children, preparing a family meal, or snacking with friends, a kitchen is a very important room in your house.
While contemporary is the most popular style across all age groups, millennial homeowners (25-34) are more likely to opt fo modern or farmhouse kitchens than older homeowners (35+), while Baby Boomers (55+) are more likely to prefer a traditional style. Millennial homeowners are also more likely to install kitchen islands.
According to the 2016 Houzz US Kitchen Study, 43% of homeowners could not stand their old kitchen and opted for a kitchen renovation.
Counter-tops, back splash and sinks are the three most popular kitchen features that undergo upgrading during a kitchen renovation. Most renovation planning for 2017 include white cabinets, grey walls and multicolored countertops. Top countertop materials are granite, quartz and butcher block.
Another interesting find from the study show that one-third of homeowners report leading a healthier lifestyle after a kitchen renovation, from eating more fruits and vegetables to preparing more meals at home. There you go, that’s a fantastic reason to gift yourself a new kitchen!
Have you been using the basement primarily for storage? You’ve got the extra space – why not turn it into something special? A place to escape every day noise, watch your favorite sports, challenge your friends to a round of pool or host family and friends.
Why not install a wine cellar or a pub? Some other ideas include transforming the basement into a recreation room, adding a bedroom and bathroom for guests or your teenager, or turning the space into your own fitness studio, fully equipped with machines and sauna.
Whatever you decide to do, renovating your basement is guaranteed to add value to your home. A finished basement not only adds extra square footage to enjoy, it boots the resale value.
A finished basement not only adds extra square footage to enjoy, it boosts the resale value.
FHA Standard 203(k) Rehabilitation Loan: For homes in need of extensive repair or renovation totaling more than $35,000, possibly including structural repair
FHA Limited 203(k) Rehabilitation Loan: For homes in need of extensive repair or renovation totaling more than $35,000, possibly including structural repair