Last Updated on June 9, 2017 by Taylor Welshe
With its five very own national parks, Utah has a lot of recreation options to offer both to its residents and visitors, and all-year round at that. The fact that it’s one of the nation’s fastest growing states, especially in the areas of information technology, government services, and mining all contribute to making the locals stay here while attracting new home buyers. Some of its most noteworthy cities include Salt Lake City, Ogden, and Provo. (Source: Livability.com)
Home ownership and associated costs
In The Beehive State, home ownership rating is at an impressive 69.9%. (Source: U. S. Bureau of Census)
One thing to remember though is that cost of living here is slightly more expensive than in other parts of the country. This is largely influenced by housing, as real estate is a little pricier. The median value of homes here is $243,700, whereas the national median is only $195,300. (Source: Zillow)
The good news is, consumers who want to make the transition from being renters to home owners have quite a lot of options when it comes to financing a purchase as major as a house. Those who have a strong and established financial framework can apply for a mortgage, which is the most common way to home ownership.
Mortgage loans in the state
Mortgages are loans consumers secure to purchase land or real estate property. Lending institutions secure the money they shell out for the purchase against the value of the property until the time that the borrower finishes paying it back. In UT, most people apply for the 30-year fixed-rate mortgage.
These loans have a term – the length of time (in years) lenders give to their borrower to make payments towards both the capital and the interest rate – of 30 years. In other words, their mortgage loan payments are divided into 360 months (30 years multiplied by 12 months).
Borrowers have to make sure they can cope up with their monthly mortgage payments, or the lenders can repossess (take back) the house, since the loan is secured against its value. The lending institution can then sell the house again in order to recover from the loss of the first loan issued.
Comparing fixed-rate vs. adjustable-rate mortgages
There are two primary types of housing loans: those that have a fixed interest rate and those that come with a changing interest rate.
Fixed-rate mortgages, as the term already implies, are loans that have a locked-in interest rate. In short, borrowers enjoy the security of knowing that their monthly mortgage payments won’t change for the entire life of the loan, even if the market suffers. They can easily predict how much their housing loan-related costs are.
Adjustable-rate mortgages (ARMs), on the other hand, have an interest rate that can change depending on the performance of the market. Factors that influence the adjustment include inflation, employment rate, foreign markets, and stock markets. The most attractive feature of these housing loans is their lower upfront interest rate, which lenders usually implement for the first few years of the term. The “promotional” rate can last anywhere from one to five years (or even more).
Lowering the interest rate
For home owners experiencing difficulties in paying back their loan, they can seek assistance from a number of organizations, such as the Utah Housing Corporation. It offers refinancing assistance, which can benefit existing borrowers, as it can bring down interest rate considerably. In fact, this is the primary reason many home owners choose to go about this method.
As long as it’s done right, consumers can reduce interest rate by 1%, which can make a huge difference in overall mortgage costs. With this reduction, monthly payments go down as well. They can also speed up the completion of their loan repayment.
Utah Housing Corporation: