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.

Understanding New Home Construction Loans

Do you want to build a house? A new home construction loan can provide you with the funds you need.

Unlike a standard home loan, which often comes with a 15-year or 30-year term, a construction loan has a much shorter lifespan – the term is usually a year or less, however long it takes for construction to be complete. At that point, you switch to a traditional mortgage.

Lenders offer two types of new home construction loans. Here, the Integrity First Lending team explains the difference between stand-alone and construction-to-permanent loans and how to qualify for the financing you need.

Utah construction loan programs

Stand-Alone Construction Loans

A stand-alone loan covers just the costs of building a house. The lender offers an advance for the home construction expenses, and while the work is being done, you pay only interest. Afterwards, you take out a traditional mortgage to pay off the construction debt.

If you own a home you plan to sell, a stand-alone loan may be a smart option. After selling, you should have a larger down payment, which could help you secure more favorable terms and allow you to avoid paying private mortgage insurance. However, when it’s time to transition to a traditional mortgage, there’s a chance you could face higher interest rates.

Construction-to-Permanent Loans

A construction-to-permanent loan covers home building costs, then converts to a traditional mortgage. Your payments remain constant the entire time with this type of financing, and you don’t have to worry about qualifying for a mortgage after the construction work is complete.

With a construction-to-permanent home loan, you can choose from a fixed-rate or adjustable-rate, and most lenders offer a term length of 15 or 30 years. Going with this type of financing can be more convenient, which is why most people prefer it over a stand-alone loan.

Qualifying for a New Home Construction Loan

Many banks and financial institutions are leery of offering new home construction loans. After all, they aren’t backed by collateral – so lenders take a greater risk by providing financing for a new home build.

To protect themselves in the event of poor building practices or falling property values, lenders often impose strict qualification requirements. These usually include:

  • Using an licensed general contractor with experience building homes
  • Providing detailed project specifications, a construction timeline and a practical budget
  • Putting down at least 20 percent to ensure you are invested in the project

If you meet these conditions – and you have both a solid credit score and a reliable source of income – you should be able to qualify for a stand-alone or construction-to-permanent home loan.

Are you ready to find your ideal financing solution? To explore your new home loan options, turn to the professional team at Integrity First Lending.

Our highly trained and experienced loan officers can answer your questions, offer advice and help you find the funds to build a house in northern Utah. For more information on new home construction loans, contact Integrity First Lending today.

Mortgage Down Payments – How Much Do You Need to Buy a Home?

If you’re planning to take out a mortgage to buy a home, you will likely need a down payment. In other words, you will probably have to pay some cash upfront in order to get a home loan.

How much money will you need to save up? Mortgage lenders often prefer 20 percent down payments, but you can buy a home with less. Here’s what to consider as you make plans to become a homeowner.

How much is a Utah mortgage down payment?

Mortgage Down Payment Minimums

Though you can buy a home with less than 20 percent down, most mortgage programs have minimum requirements. They type of home loan you take out will dictate how much cash you will need:

  • FHA loan – 3.5 percent of the purchase price
  • HomeReady loan – 3 percent of the purchase price
  • Conventional loan – 3 percent of the purchase price

With VA home loans and USDA loans, no down payment is required. These mortgage programs allow you to finance 100 percent of a property’s purchase price.

Keep in mind, though, that these are minimum requirements. You can choose to put more money down if you like.

When a Smaller Mortgage Down Payment Makes Sense

Putting down the minimum amount required can be a smart approach for some aspiring homeowners. Reasons to pay less upfront include:

  • Saving up will take less time, allowing you to buy a home sooner
  • Putting all of your cash down may leave you with little for emergencies
  • Keeping some money in savings means you’ll have funds for home improvements

Advantages of Making a Larger Mortgage Down Payment

The more money you pay upfront when you buy a home, the smaller your home loan. Borrowing less money offers several benefits:

  • You pay less in interest over the life of the home loan
  • You may qualify for a lower mortgage interest rate
  • Your monthly mortgage payments will be lower
  • You will likely have an easier time qualifying for additional financing

Furthermore, if you put down at least 20 percent when you buy a home, you can skip paying for private mortgage insurance (PMI). The annual cost of PMI can be as much as one percent of your home loan amount – and it can add hundreds to your monthly mortgage payment.

In the end, only you can decide how much money to put down. But if you want expert advice and guidance through the mortgage process, turn to the professional team at Integrity First Lending.

Our friendly loan officers have decades of combined experience in the Utah home lending industry. We can explain your mortgage options, answer your questions and help you shop for a home loan with excellent terms.

If you’re ready to buy a home in Utah, contact Integrity First Lending in South Jordan or Tooele to discuss your mortgage down payment and find your ideal financing solution.

Home Loan Refinancing – Pros & Cons of Property Appraisals

Home loan refinancing can allow you to take advantage of lower mortgage rates, thereby reducing your monthly payment and your overall interest costs. Before approving a refinance loan, however, some lenders require a professional property appraisal.

But, that isn’t the case for mortgages through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Both offer streamline refinance programs, and neither require appraisals.

If you can skip the appraisal process, should you do so? Or is it better to go ahead and get your property appraised? Here’s a look at the pros and cons of each approach.

Do you need an appraisal for a Utah refi?

Advantages of Refinance Appraisals

For some homeowners, getting a property appraisal before home loan refinancing can be a smart move. Reasons you may want to consider this option include:

  • If your home value has increased, you may qualify for a better mortgage rate
  • A higher valuation can enable you to get more cash out when refinancing
  • A new loan-to-value ratio may be sufficient to avoid private mortgage insurance (PMI)

Disadvantages of Refinance Appraisals

Not all homeowners can benefit from getting an appraisal. Skipping the process may be in your best interests if any of the following apply:

  • Your home value has likely decreased due to a rash of foreclosures or short sales in the neighborhood
  • You’re hoping to lower your monthly mortgage payments to free up the budget, and don’t have the hundreds (or more) you would need to your property appraised
  • You don’t want to spend time and money staging your property, which may be necessary to secure higher home value
  • You don’t want to risk a low valuation, which could result in restructuring of your refinance loan or even disqualify you for home loan refinancing

Research Before You Consider Refinancing

In order to avoid any unpleasant outcomes, do some online research. Several popular real estate websites offer general property appraisals – simply enter your address to see an estimate of your home value.

As an alternative, you could also ask a local realtor to complete a market analysis of your property. This should give you a good idea of what to realistically expect from a professional appraisal.

If your research leads you to believe your property has increased in value, getting an appraisal might be best – even if your home loan refinance program does not require you to do so. On the other hand, you may want to skip appraisals if you would rather not take the risk or spend any more funds than necessary.

Are you considering mortgage refinancing? If you live in South Jordan, Toole or the surrounding northern Utah area, turn to the home loan refinance experts at Integrity First Lending.

At Integrity First Lending, our experienced team can answer your questions and offer advice on refinance appraisals. To explore your home loan refinancing options, contact us today.

PITI: Home Loan Payments Explained

Your home loan payment may make up a significant part of your monthly budget, so understanding where the mortgage money goes is important.

Contrary to what many people think, you are not just paying back the money you borrow. Here, we explain the four components of a home loan payment — principal, interest, taxes and insurance (PITI) – and the other mortgage-related costs you may have to pay each month.

What does PITI mean

Principal

The principal portion of the mortgage payment is the original amount of money you borrow to buy a home. If the house you purchase costs $200,000 and you put down 20 percent, or $40,000, the initial principal balance is $160,000.

Interest

Interest is a percentage of the principal, and it goes directly to the lender as their reward for taking a risk in loaning you money. Early on, the majority of your home loan payment will go toward interest. As time goes on, a larger portion will go toward paying down the principal.

Taxes

When you buy a home, your local government will charge you property taxes every year to fund public services like police forces, fire departments, schools and roads. Your lender will collect a portion of the taxes each month as part of your home loan payment, holding the funds in an escrow account until the time they are due.

Insurance

Homeowners insurance protects you in the event your property is stolen or damaged by a natural disaster. Your monthly mortgage payment will include a portion of your insurance premium, which the lender will hold in escrow until it is due. The amount you will have to pay depends upon the home you buy, your location and the type of coverage your policy provides.

Mortgage-Related Fees

Technically, your monthly home loan payment includes just the principal, interest, taxes and insurance. However, you may have other mortgage-related fees that must be paid each month.

Private Mortgage Insurance

If your down payment is less than 20 percent of the price of the home you buy, you will have to carry private mortgage insurance (PMI). This type of coverage protects the lender if you default on the home loan. The amount of your PMI is likely to be between .5 and 1 percent of the principal, and you will pay a portion of the total premium each month.

Homeowners Association Fees

If you buy a home in a private residential community, you may be required to pay homeowners association dues. These typically help cover the costs of landscaping and maintaining common areas. Depending upon your HOA, the monthly fees could be up to a few hundred dollars.

Are you planning to buy a home in northern Utah? Understanding how mortgage payments are structured can help you make a smart investment. For answers to your questions and expert guidance through the mortgage process, turn to Integrity First Lending.

With decades of combined experience in the Utah home lending industry, the Integrity First team makes shopping for a mortgage a smooth and easy experience. Contact our South Jordan or Tooele office to learn how we can help you get a house you love and a home loan payment you can afford.

Home Equity Loan or Cash-Out Refinance: Which Is Right for You?

Home equity loans and cash-out refinance loans both allow you convert the equity in your home to cash you can access immediately. Either option can provide you with the funds for renovations, repairs, debt consolidation or anything else you need.

Here, the Integrity First Lending team looks at the differences between the two types of loans and shares expert insights on how to decide on the best way to borrow against the equity you have in your home.

Home equity and refinance loans Utah

What is a Home Equity Loan?

A home equity loan (HEL) is a second mortgage, one that does not alter the terms or conditions of your current mortgage. As it is a completely separate loan, an HEL comes with a separate payment.

The amount you can borrow varies by lender, but is usually between 75 and 90 percent of the equity you have built. The proceeds are paid out in a single lump sum.

What is a Cash-Out Refinance Loan?

A cash-out refinance loan replaces your current mortgage with a loan for an amount higher than what you owe. With this option, you will end up with just one mortgage payment.

At closing, you will receive the borrowed funds in a lump sum. As for how much you can borrow, that depends upon the loan type. Most require that you leave some equity in the home, but you may be able to get a cash-out loan for 100 percent of the value in your home.

Deciding on the Best Way to Borrow Against Your Home Equity

If refinancing would mean taking a significantly higher mortgage interest rate, an HEL may make better sense. The same may be true if you want a short-term loan and plan to pay if off quickly, as HELs have lower closing costs.

On the other hand, a cash-out loan might be a smarter choice if your home value has risen or if refinancing can lower your interest rate. Keep in mind, however, that this option could add extra years to your mortgage term, as it essentially resets your first home loan.

In addition, you have a third option to consider. A home equity line of credit (HELOC) allows you to tap into the value of your home, drawing out money as you need. HELOCs function much like credit cards — as you repay the balance, the money becomes available again. A HELOC can be a good source of funds for major repairs and upgrades, but having easy access to cash can tempt some people to make unwise financial decisions.

What is the right loan solution for you? Only you can decide if a home equity loan, cash-out refinance loan or HELOC makes the best sense – but practical advice from a mortgage expert can be invaluable.

Integrity First Lending, a leading Utah mortgage broker, can help you find a financing solution that meets your needs. We can explain your options, answer your questions and assist you in shopping for a loan with the best interest rate and terms. Contact our South Jordan or Tooele office to discuss home equity loans and cash-out refinance loans today.

What are Mortgage Discount Points?

When you take out a home loan, your lender may ask if you want to pay for any mortgage discount points.

Paying for points is a way of prepaying interest on your mortgage. The more you buy, the lower your home loan interest rate will be – which is why the process is referred to as “buying down the rate.”

For more details on mortgage discount points and practical advice on when paying for them is a smart move, read on.

Understanding discount points for home loans

How Discount Points Affect Mortgage Interest Rates

One point is equal to one percent of your home loan. So, if you take out a home loan of $300,000, you will pay $3,000 for a full point. In exchange, your lender will typically reduce your interest rate by .25 percent.

Depending upon your mortgage lender, you may have the option of paying anywhere from half a point to several points. Or, of course, you can decide not to buy any at all.

How Buying Points Changes Monthly Mortgage Payments

Paying for discount points brings down your interest rate, which therefore reduces your monthly mortgage payments. But how much can you save?

Let’s say you take out a $300,000 home loan with a 30-year term and a base interest rate of 5 percent. Without any points, your monthly principal and interest would be $1,288.

If you pay one point, your interest rate will drop to 4.75 percent – and your mortgage payment will go down to $1,252. Your savings per month, then, will be $36. With two points and a rate of 4.5 percent, your amount due will fall to $1,216, which saves you $72 per month. In either case, you will break even in 84 months, or 7 years.

When Paying for Mortgage Discount Points Makes Sense

If you can afford to buy points, should you do so? The decision comes down to how long you plan to keep your current mortgage.

Paying for points only makes sense if you continue paying on your home loan until you break even, as after that time, you start to come out ahead. If, however, you refinance your mortgage or sell your home before then, you will end up losing money on the transaction.

To figure out what’s in your best interest, run the numbers. Or, speak with a mortgage expert, someone who can answer your questions about taking out a home loan.

If you live in Utah, turn to Integrity First Lending. Our free mortgage calculator makes it easy to see how discount points will affect your total monthly payment. And, our friendly team of highly experienced loan officers is always happy to offer advice and share their expertise.

Whether or not you pay for mortgage discount points, Integrity First Lending can help you find the ideal home loan solution. Contact our South Jordan or Tooele, Utah, office today.

Home Refinancing: 6 Reasons a Refinance Loan May Be Right for You

When is the right time for home refinancing?

A refinance loan could help you meet your financial needs and goals, and there are several situations that indicate refinancing could be to your benefit. If any of the following apply to you, you may want to kick start the mortgage refinance process soon.

Home refi loans in Utah

No. 1: You Can Get a Lower Interest Rate

Have interest rates dropped since the time you obtained your original mortgage?

If so, home refinancing could help you get a lower rate. With a refinance loan, you may reduce the amount of interest you pay each month and over the lifetime of your mortgage. 

No 2: You Would Like a Lower Mortgage Payment

Are you hoping to decrease the amount of your monthly mortgage payment?

If the current interest rates are not favorable, you may be able to get a refinance loan with a longer term. By refinancing to pay off your mortgage more gradually, your monthly payments will be lower. 

No. 3: Your Credit Score Has Improved

How does your credit score look right now?

If your score is significantly higher than it was when you first obtained a mortgage, home refinancing could be advantageous. With a refinance loan, you may save thousands of dollars over the life of your loan. 

No. 4: You Want to Switch to a Fixed-Rate Mortgage

Is the fixed period on your adjustable-rate home loan about to end?

If you want to avoid paying a high interest rate, you might want to consider home refinancing. That way, you can choose a fixed-rate refinance loan and protect yourself from future rate increases 

No. 5: You Can Pay Off Your Home Loan Faster

Can you afford higher monthly mortgage payments?

If so, you may want to think about taking out a refinance loan with a shorter term than your original mortgage. By doing so, you will save on interest and free yourself from making home loan payments much sooner. 

No. 6: You Want to Consolidate Your Debts

Did you know that home refinancing can help you pay other debts?

If you have high-interest loans, credit card debt, medical bills and other financial obligations, refinancing may make budgeting much easier. Your home equity can provide you with the cash you need to pay your debts

To determine if home refinancing is right for you, you will need to speak with a mortgage expert – like the professionals at Integrity First Lending.

Our highly-experienced team can offer practical advice on refinancing and help you find a solution that fits with your financial plan. Let Integrity First Lending, a leading Utah mortgage company, handle your home refinancing and mortgage loan needs, and you will have a stress-free experience. Contact our South Jordan or Tooele office to explore your refinance loan options today.