New Year, New Home: Why January is a Great Time to Start House Shopping

Whether it’s an enduring myth, popular wisdom passed from generation to generation or just a habit we have gotten into as a society, many people believe that the best time to shop for a new home is in the spring and summer months. This is arguably the time when there is the most inventory on the market (since many homeowners also believe that it’s the best time of year to list a home), but that doesn’t mean you have to wait for the warmer weather to go out and find your dream home. In fact, January is a great time to start your search for a place to live. Here’s why.

January is the best time of year to start shopping for a new home.

Fewer Buyers

Since everyone else also believes that spring and summer are the best times to build or buy a home, there are fewer buyers to compete with during the winter months. In a hot housing market, that can make a huge difference, allowing you to take your time to check out several listings or builders and not feel pressured to make an offer immediately or worry that you will miss out on the house if you don’t.

Lower Prices

Because there is less inventory on the market, and fewer buyers to compete with, homeowners that put a house up for sale in the winter often list it for less than they would in the summer. Even if the listing price is high, you may be able to put in a lower offer and have it accepted, saving you thousands on the purchase of your new home. In fact, the personal finance website NerdWallet analyzed two years or real estate data from 50 U.S. metro areas and found that home prices in January and February are 8.45% lower than any other time of the year. Home builders also know that the winter is a slower time of the year, so they may be offering incentives like free upgrades or other benefits to get you to start your home building process now during a slower season for subcontractors.

Rates are Low

It may not be true every January, but in 2020 mortgage rates continue to be at historic lows, which saves you money on your monthly mortgage payment and also saves you thousands in interest over the course of a 30-year loan. Nobody can predict what might happen to interest rates in the future, so now is a great time to lock in those rates.

Ready to start shopping for a new home? Contact Integrity First Lending to get prequalified for a mortgage and find out what your rates will be.

Understanding the Mortgage Preapproval Process

For anyone who has gone through the process of trying to buy a new home, you know it can be a little frustrating at times. But there are a few things you can do that will streamline the process so you can get into that home of your dreams just a little sooner. One of those things is to get a mortgage preapproval.

Mortgage preapprovals help you confidently put in an offer on the home you want.

Prequalification Versus Preapproval

As the names would imply, a “pre” qualification and “pre” approval is something you do before you close on your home. However, while some people might use these two terms interchangeably, there are differences between the two.

Prequalification is a very early process where a lender takes some basic information with the goal of giving you an idea of how much of a loan you can qualify to get. They won’t do an in-depth review of your finances, but it helps homeowners to know they’re shopping for houses in the right range. It can also help you and the lender figure out what type of home loan would work best in your situation. For prequalification, all you need is:

  • Current income information
  • Quick credit check (the lender performs this, and it won’t hurt your credit score)
  • Basic bank account balance information
  • Estimated down payment amount

Preapproval, on the other hand, is a more in-depth process that you would go through when you’re getting closer to choosing the home you want. You will provide more detailed information and the lender will get you pre-approved for a specific mortgage loan type and amount, which means you can confidently put in an offer on the home you want. You need:

  • Copies on your most recent pay stubs showing the past 30 days of income
  • An in-depth credit check (again, this won’t hurt your credit score if you’re actively shopping for a new home)
  • Bank account information that includes account numbers and your two most recent statements
  • Proof of the down payment you plan to make
  • The amount of the mortgage loan you plan to get
  • Tax information, including W-2 statements and/or tax returns for two years (if you own a business or are self-employed)

Benefits of Preapproval

With all this information, your lender can give you information about exactly how much of a mortgage you can quality for, and the seller knows you are a serious buyer. This is particularly helpful in a competitive market, where the seller may have multiple offers; they’re more likely to accept an offer from someone they know can qualify for a loan.

Ready to take the next step in your homebuying journey? Talk to Integrity First Lending today to find out what it takes to get preapproved and go put in an offer on the perfect home.

Things that Can Delay Your Home Loan Closing

There are few things in life more frustrating than finding your dream home and being ready to move in only to find out that your loan process has hit some delays (sometimes your fault, and sometimes it’s because of someone or something outside your control). If you are considering purchasing a new home any time soon, here are some things that you should be aware of that could throw a wrench in your home buying timeline.

Don’t risk delaying your home loan; address these common issues to keep things on track.

Changes to Your Employment Status

Since the homebuying process takes place over a period of several weeks (or even a couple of months), it’s important to make sure that your employment remains steady during that entire time. If you are planning to switch jobs or you know there will be a change to your income in the near future, talk to your lender to make sure you apply for the loan at the right time to avoid delays or problems that arise if your employment status changes.

Changes to Your Credit Score

One of the most common mistakes people make is to thing that because you got your pre-approval, you’re free to go and spend money or open new lines of credit. Making big purchases or having several credit inquiries right before your loan closes can impact your credit score and possibly even your eligibility for a loan. Save any big purchases or new credit lines for after your loan closes.

Low Appraisal Value

Some homeowners find that their loan is delayed after the appraisal comes back on a property and it’s lower than the amount of the loan for which you are applying. Most banks and mortgage lenders will not allow you to borrow more than the actual appraised value of the home, so if this does happen and the seller will not lower the price to the appraisal value, you can still move ahead with the home purchase but you will need to find an alternate way to pay the difference (probably cash). Similarly, if a home inspection uncovers damage that was not disclosed from things like termites, or the underwriters discover some kind of lien on the property, those things will have to be addressed before the loan moves ahead.

Paperwork Delays

Additional delays can also happen when your lender doesn’t have the proper paperwork on the scheduled closing date. Unfortunately this is completely out of the homeowner’s control, but you can avoid these issues by working with a trusted mortgage lender that offers close-on-time guarantees.

Talk to Integrity First Lending about all the steps to prepare for your home loan to ensure that there is nothing in the way of moving into your dream home.

How to Decide When You Should Refinance Your Mortgage

Interest rates on home loans are at or close to all-time lows, but if you’re not in the market to purchase a home right now, it might seem like that news doesn’t impact you. However, for any homeowner with a higher interest rate on their mortgage, now might be the perfect time to take advantage of the low rates with a refinance. The key is to refinance only if it makes sense in your specific situation, which won’t always be the case, so how do you know when it’s the right time? Here are a few things to consider when you’re deciding.

Find out if now is the right time to refinance your mortgage and get a lower rate.

Current Interest Rate

The most logical reason to refinance your mortgage in Utah is to lower your interest rate, or to go from an adjustable rate that fluctuates or even increases over time to a fixed rate that will remain low. Take a look at what your current rates are and talk to a lender about whether or not you would save enough money by refinancing to make it worth your while. While there are no hard-and-fast rules about exactly what the interest rates should be to consider refinancing, a lender can help you calculate your estimated monthly savings to find out how much you can save.

PMI

If you didn’t have 20% to put as a down payment on your loan when you initially got your mortgage, you are paying a monthly premium for mortgage insurance, or PMI. If home values have increased and you have paid down some of your initial loan, you may be able to refinance and have 20% equity or more, which would eliminate your PMI. That, combined with the low rates, could save you hundreds on your monthly mortgage payments.

Loan Maturation

If you are in year 25 of a 30-year mortgage, refinancing could actually be counterproductive, because the majority of your payment is going toward principle instead of interest. Even if you refinance for a shorter loan period, you will once again be paying more toward interest for a while. However, if your current interest rate is high enough, the monthly savings from a new loan may offset the downside of getting a new loan.

Cash Flow

Another consideration is whether you need (or want) some cash. Many homeowners refinance as an option to turn a home’s equity into cash to pay down debts with higher interest rates, pay for kids’ college education, or remodel or add on to your home.

Understand the Costs and Benefits

Most refinance options do come with fees such as appraisals, credit checks, origination fees and closing costs; these usually add up to about 2% to 6% of the total loan amount, so if you won’t achieve substantial savings from the refinance, it might not be worth the added costs.

The easiest way to find out if now is the right time for a refinance is to talk to an expert at Integrity First Lending. Our goal is a stress-free experience to help you refinance when it’s the right time.

When to Lock in a Mortgage Interest Rate

If you’re thinking about buying a home, getting the lowest possible interest rate is crucial; low interest rates mean a lower total monthly payment, and lower payments over the life of the loan. On a $250,000 house, a 0.5% increase in your interest rate adds about $75 to your monthly payment, and over the life of a 30-year loan can add more than $25,000 to the total you will pay.  Rates change over time, so for some people it makes sense to lock in an interest rate before you’re ready to close on your home.

A rate lock protects you if interest rates increase while you’re buying a home.

How Do You Lock an Interest Rate?

Many lenders offer the opportunity to lock in, or freeze your interest rate for a certain amount of time before your loan officially closes. Even if interest rates go up you will get a mortgage at the lower rate you locked in. For traditional home loans you might lock it for a couple of months, while construction loans offer the chance to lock in a rate for several months while the home is built. There is a fee associated with locking in a low rate, though, so it’s not the right choice for everyone.

The Downside of Locking in a Rate

As the term suggests, once you “lock in” an interest rate (and pay any fees associated with doing so), your rate will not change. If rates go up in the meantime that’s a good thing, but if rates go down, you are still getting the higher rate you locked in. Some lenders do offer the chance to reduce or “float down” your rate once, and you can void a rate lock if something about your loan changes—such as the property value appraisal, your income, or the length or terms of your mortgage—but those things are unusual in the home loan process.

Is a Mortgage Rate Lock Right for You?

Unfortunately nobody really knows what will happen with interest rates (anyone who tells you otherwise is not being truthful), so trying to predict what they will do in the future is impossible. If you get approved at a low rate that you want to protect, or recent trends suggest that rates may go up, that’s the time to consider a rate lock.

If you do go ahead with a mortgage rate lock, make sure you lock it in long enough to allow time to close your loan—the average closing time is about 45 days, but your lender can provide you with an estimate of how long it will take and then you should add in a few extra days just to be safe. Most lenders charge a fee for this service, so before you go ahead make sure you know the terms and costs. If your interest rate lock expires before closing, you will be subject to whatever the current rate is, and any fees you paid for the lock is probably not refundable.

Talk to our experienced loan officers at Integrity First Lending today to find out if a mortgage rate lock is right for you.

Four Renovations that Can Increase Home Value

If you’re like many homeowners, the value of your home has increased in recent years with a good economy. That increase in home value means you have more equity, and you might be considering using some of that equity to renovate and improve your home. Before you do, though, make sure that the renovations you’re planning are going to actually add value to the house, versus just being an expense (or worse, something that actually degrades the value of your home).

Remodeling can be expensive, but some renovations increase home value.

Updating Your Kitchen

A remodel in your kitchen often adds value to your home, and can make it easier to sell the home later if you decide to do so. An outdated kitchen can be a significant detractor during a home sale, but some new cabinets, updated flooring, countertops, and other improvements can quickly turn an older or less functional kitchen into a gathering place at the center of your home. You can often recoup a significant amount of what you invest in a new kitchen when you sell your home. Just make sure you don’t go too crazy on the upgrades, a gourmet kitchen fit for a 5-star restaurant probably doesn’t fit in your quaint mid-century home.

Add a Bedroom

This might sound like a significant undertaking, but we’re not talking about construction that alters the actual footprint of your home; instead look at space that already exists and could easily be converted to a bedroom. For example, attic space above your garage, a den or home office you never use, or an unfinished part of the basement. For some of these spaces it’s as simple as adding drywall, paint, electrical, and flooring. In others it might require some minor construction to add a closet. Make sure that any space you plan to convert to a bedroom meets building code, meaning it must have two means of egress (a door and a window or similar).

Create Space for Renters

One project that can instantly return value is creating space in your home that you can rent out. The most common are basement apartments, but you may also be able to add a small apartment over your garage or outdoor storage space. Once it’s done you can rent it out and recoup the costs right away. Check your local building codes to make sure you are allowed to rent out part of your home before you build a separate apartment.

More Bathrooms

Having plenty of bathrooms is a great way to appeal to a wide range of potential buyers, but it can also make your life easier even if you’re not planning to sell. Most home renovation gurus estimate that you can recoup 80% to 130% of your bathroom addition when you sell. Event a half bath can go a long way, and could be built in existing space like a converted closet or under the stairs.

When you’re ready to get a home equity loan for some renovations, make sure you check local building regulations to get any necessary permits, and set a budget so you can stick to remodeling that will add value to your home.

Do You Know How to Improve Your Credit Score?

Your credit score holds a lot of power over your life, but many people lack an understanding of their own credit score (and how to improve it), and not knowing the truth or believing some of the myths out there can significantly impact every part of your financial life. A credit score is a number that tells creditors how likely you are to pay back a debt, so the higher your score, the easier it is to borrow money.

Improving your credit score takes work, but it can be done if you know how.

Check Your Credit Score

The most important first step to improving your credit is knowing exactly what your score is today. Scores can range from 300 to 850, and generally fall into the following categories:

  • Exceptional: 800 to 850
  • Very Good: 740 to 799
  • Good: 670 to 739
  • Fair: 580 to 669
  • Poor: below 580

There is a common myth that checking your credit score will actually hurt your score, but that is not the case. Everyone has access to a free annual credit report from each of the three main credit bureaus and you should check it every year so you can spot incorrect information that could be hurting your score and get it corrected. It’s also important to know that you have several credit scores, and the exact number can vary day to day, or depending on where it comes from and how it’s calculated.

Improving Your Score

If you do find out that your score is low, there are some steps you can and should take immediately to improve it, including:

  • Pay monthly installment loans (student loans, car loans, mortgage, etc.) on time every month
  • Don’t open new credit accounts unless absolutely necessary
  • Pay off high credit card balances as quickly as possible
  • Regularly monitor your credit reports and dispute incorrect information
  • Keep your credit balance low, or pay it off every month in full if possible

Don’t Be Fooled by Credit Fix Companies

There are some companies who claim they can immediately fix your credit (for a fee, of course), but to fix your credit you need to practice good financial habits like those listed above, and over time your credit will improve. The only way to immediately improve your credit score is to remove inaccurate negative information, but you can do that for free and don’t need to pay a credit repair company.

Improving your credit score is not something you can do overnight, but it is worth it to be able to borrow money at lower interest rates and take out loans for the important things in your life, such as vehicles, a home, and an education.

Mortgage Recast or Refinance Loan – Which Option Is Best?

Are you looking to lower your monthly home loan payment? You can achieve that goal with a mortgage recast or a refinance loan. Plus, by recasting or refinancing your mortgage, you’ll also pay less in overall interest.

To know which option would be your best financial move, you need to understand how they differ. Here, we explain how mortgage recasting and refinancing work and what to consider in making a decision about your home loan.

Home refinancing help in Salt Lake City

How a Mortgage Recast Works

Recasting requires you to make a sizeable lump-sum payment toward your home loan balance. The minimum amount varies by lender, but in most cases, a mortgage recast takes a payment of at least $5,000 and a few hundred dollars in fees.

After you ante up the necessary cash, your lender will recalculate your remaining mortgage payments based upon the lower balance. You can expect the total due each month to drop and, because you paid down the principal, you’ll ultimately end up paying less interest.

How a Refinance Loan Works

Refinancing requires you to apply for a new home loan and use it to replace your existing mortgage. Borrowers often go this route to switch from an adjustable-rate to a fixed-rate or to get a better interest rate.

With a refinance loan, you can lower your monthly home loan payment and pay less in interest. However, when you take out a new mortgage, you’ll be responsible for paying the associated fees and closing costs.

Is Recasting or Refinancing Right for You?

A refinance loan typically costs more than a mortgage recast. And, refinancing means going through the whole home loan application process again — and recasting doesn’t require a credit check or appraisal.

On the other hand, a refinance loan allows you to lower your interest rate or make changes to your mortgage terms. With recasting, you can’t do either. And, with some types of mortgages, including FHA and VA financing, recasting is not an option.

Furthermore, if you have a lump sum of cash available, using it to pay down your home loan balance may not be the best use of the money. You might be better off putting it toward high-interest credit card debt, for example, or creating an emergency savings fund.

Should you apply for a refinance loan? Or would a mortgage recast make better sense? Financial circumstances vary, so neither option is best for every borrower. To make an informed decision, consult with the trusted mortgage brokers at Integrity First Lending.

Our dedicated loan officers have decades of combined experience in the Utah home lending industry, and we’re happy to offer advice on recasting and refinancing. If you want a lower monthly home loan payment and need expert help deciding between a mortgage recast and a refinance loan, contact Integrity First Lending in South Jordan or Tooele, Utah, today.

How VA Home Loans Compare to Conventional Mortgages

If you’re a veteran, an active-duty service member, reservist or military spouse, taking advantage of your VA home loan benefits may be a smart decision. Mortgages through the U.S. Department of Veterans Affairs come with several advantages that can make buying a home easier on you and your budget.

However, no single financing solution is right for everyone – and in certain circumstances, a conventional mortgage can be more practical than a VA home loan. To figure out which best meets your needs, consider the following factors.

VA loans in South Jordan UT

Property Type

You can only use a VA loan to finance the purchase of your primary residence, or the home you plan to live in for most of the year. With a conventional mortgage, you can also buy a primary home – or, if you like, you can use the loan for a second home or an investment property.

Down Payment

If you take out a VA home loan, you won’t need to save up for a down payment unless the property purchase price is higher than its market value. A conventional mortgage requires you to put money down – at least 3 percent, though some lenders ask for 5 percent or more.

Credit Score

As far as the VA is concerned, the loans they insure have no minimum credit score. But if we’re being honest, we have to mention that lenders typically look for scores of at least 620. As for conventional mortgages, the minimum to qualify is between 620 and 640, but a higher credit score is necessary for a lower interest rate.

Interest Rate

The interest rate for a conventional mortgage depends heavily upon your credit score, and if yours is less than stellar, you may not like the lender offers. With a VA loan, you’re more likely to see a favorable interest rate – and that means lower monthly mortgage payments and reduced overall costs.

Other Loan Costs

If you choose a VA loan, you can expect to pay a funding fee of between 1.25 and 3.3 percent of the home purchase price. However, the one-time charge can be rolled into your home loan total.

A conventional mortgage won’t come with a funding fee. But if you don’t make a down payment of at least 20 percent, you’ll have to pay for private mortgage insurance. The rate for PMI can be up to 2.25 percent of the original loan amount – and it must be paid every year until you have at least 20 percent in home equity.

Should you go with a VA home loan or a conventional mortgage? Only you can make that decision – but if you want expert advice from a leader in the northern Utah home lending industry, turn to the professional team at Integrity First Lending.

Our highly experienced mortgage brokers have the skills and qualifications to find your ideal financing solution. If you’re ready to buy a home in the greater Salt Lake City area, contact Integrity First Lending to discuss VA home loans and conventional mortgages today.

How to Qualify for a Utah Investment Property Loan

Getting an investment property loan isn’t as easy as getting a home mortgage. Lenders have stricter requirements for real estate investors, so anyone looking to become a landlord needs to be in a strong financial position.

Why the tighter lending standards? Simply put, investment loans are riskier for lenders, as rental properties have higher default rates than primary home mortgages.

If you’re interested in investment property loans, an expert in rental home financing can answer your questions and help you explore your options. But for a general idea of what it takes to qualify, read on.

Investment property loans in Tooele

Credit Score

To secure an investment property loan, you’ll need a good credit score. The minimum score isn’t the same for every lender, but for a favorable interest rate and terms, yours needs to be above 740.

Down Payment

Generally speaking, lenders require a down payment of at least 20 percent for rental home. If you want financing for a multi-family investment property, however, you will likely need to put 25 percent down.

Debt-to-Income Ratio

In order to qualify for a property investment loan, your debt-to-income ratio should be at or below 36 percent. A slightly higher number may be acceptable for some lenders, but if yours rises to 45 percent, you’ll likely be denied financing.

Loan-to-Value Ratio

Lenders compare the investment loan amount to the fair market value of the property. This ratio reveals their risk of loss in the event of foreclosure, based upon the amount of equity in the rental home. In this case, less than 80 percent is the ideal.

Cash Reserves

Lenders often require real estate investors to have extra financial assets. Some want borrowers to have enough cash reserves for several months’ worth of home loan payments, including taxes and insurance, but the exact amount required varies.

Become a Real Estate Investor with Integrity First Lending

Investing in rental properties can be a smart way to improve your financial future, but finding a lender and qualifying for financing can be challenging.

If you’re ready to become a landlord in northern Utah, Integrity First Lending can help you achieve your goal. Our team of professionals has decades of combined experience in the mortgage and loan industry, and we can streamline the process of securing a property investment loan that meets your needs.

At Integrity First Lending, serving Salt Lake City and the surrounding northern Utah communities, we want you to see success as a real estate investor. Contact our South Jordan or Tooele office to find out everything you need to know about qualifying for an investment property loan today.