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.

VA Home Loans – Top 10 Benefits for Borrowers

VA home loans can make becoming a homeowner easier and more affordable—yet only 13 percent of those who are eligible take advantage of their VA loan benefits.

For veterans, reservists, active-duty service personnel, military spouses and members of certain other groups, VA home loans can be the ideal mortgage solution. Here’s why.

Utah VA home loans

No. 1:  No Down Payment

Unlike most conventional loan programs, VA mortgages enable borrowers to finance 100 percent of a home’s purchase price. The lack of a down payment puts homeownership within easier reach.

No. 2:  No Mortgage Insurance

With conventional home loans, lenders typically insist that borrowers who do not put at least 20 percent down pay for mortgage insurance. As this is not the case with VA loans, they are a very affordable option.

No. 3:  Low Closing Costs

Saving up money for closing costs can be an obstacle to becoming a homebuyer. VA loans help in this regard, as borrowers are exempt from some of the fees normally due at closing.

No. 4:  Easy Qualification

Like all types of mortgages, VA loans have eligibility requirements. However, compared to most other mortgage programs, the guidelines are more flexible. So, even borrowers with less-than-stellar credit can qualify.

No. 5:  Government Guarantee

Lenders offer exceptionally favorable terms for VA home loans for a reason – they come with a guarantee from the federal government. In the event of foreclosure, the lender receives compensation for their loss.

No. 6:  No Prepayment Penalties

When borrowers decide to sell their homes or refinance their mortgages, VA loans do not impose early-exit fees. There are no penalties for prepayment or refinancing, regardless of the time frame.

No. 7:  Funding Fee Flexibility

VA loans require most borrowers to pay a funding fee. But the costs are waived in some cases, and funding fees do not have to be paid in cash – the expense can be added to the home loan.

No. 8:  Financing Options

Fixed-rate and adjustable-rate VA loans are available. And, a borrower can finance the purchase of a house, duplex, condo, manufactured home or other types of properties. In addition, borrowers can refinance their existing mortgages.

No. 9:  Potential for Transfer

When a borrower decides to sell their home, they can transfer their VA mortgage to an eligible buyer. The fact that VA loans are assumable can be a huge benefit, particularly with the rising interest rates.

No. 10: Range of Mortgage Lenders

VA home loans are not funded by the government – banks, credit unions, savings-and-loans institutions and mortgage companies provide the funding. So, borrowers have the freedom to shop around and compare offers.

Are you eligible for a VA loan? If you’re ready to become a homeowner in Utah and want to explore your home loan options, Integrity First Lending can help.

As mortgage and home loan experts with decades of combined experience, the Integrity First Lending team has the skills and qualifications to find your best financing solution. We can get you pre-qualified and pre-approved for a mortgage, and with us, the process of becoming a homeowner is both easy and convenient. Contact our South Jordan or Tooele, Utah, office today to discuss VA home loans.

The Basics of Closing Costs for First-Time Home Loans

In addition to a down payment, most conventional first-time home loans come with closing costs. These fees can make budgeting to buy a house more difficult, so understanding what to expect ahead of time is important.

Here, the mortgage experts at Integrity First Lending explain what closing costs cover, how much yours may be and an option to avoid saving up for the expense.

First-time buyer closing costs

What Are Mortgage Closing Costs?

Generally speaking, they’re costs charged at the closing of a real estate transaction. Most home buyers pay fees for:

  • Property appraisal
  • Home inspection
  • Property title search
  • Home loan application
  • Mortgage underwriting
  • Mortgage insurance application
  • Lender’s title insurance

Mortgage lenders typically also require home buyers to prepay a portion of their property taxes. Plus, the annual homeowners insurance premium along with another two or three months’ worth of payments is usually due at closing.

How Much Are Mortgage Closing Costs?

In most cases, the costs at closing are between two and five percent of the mortgage loan total.

To put that into perspective, imagine you’re thinking about buying a house for $350,000. The total of your closing fees would likely be somewhere between $7,000 and $17,500.

Can the Home Seller Pay the Closing Costs?

If saving up enough money to pay the costs due at closing would mean putting off your dreams of becoming a homeowner, you might consider another option – structuring your offer to have the seller absorb the fees.

Here’s how that could work, using the above example. Let’s say you’ve agreed to the price of $350,000, and according the mortgage lender’s outline of closing expenses included with your first-time home loan estimate, your costs will amount to $10,000. Offer the seller $360,000, stipulating in the contract that the seller will use the extra to cover the fees at closing.

Should You Consider Financing Your Closing Costs?

If you can’t afford to pay the costs upfront, incorporating them into your first-time home loan could be a smart move. That way, you won’t have to delay your dreams of becoming a homeowner. And, if you plan to stay in your new home for just a handful of years, you might end up paying less overall if you finance the closing expenses than if you pay upfront.

Keep in mind, though, that you’ll likely end up with a less favorable interest rate and higher monthly mortgage payments. But later on, you can consider refinancing to improve your home loan terms.

Are you ready to buy your first house? For expert help navigating the mortgage process and answers to all of your questions about first-time home loans in Utah, turn to the experts at Integrity First Lending.

With decades of combined experience in the home loan and mortgage industry, the Integrity First Lending team has the skill to find a financing solution that meets your needs and fits your budget. For more information on closing costs or to explore your options for first-time home loans, contact us today.

First-Time Home Loans – 15-Year vs. 30-Year Mortgages

Getting ready to apply for a first-time home loan? One of the most important decisions you’ll need to make is whether to go with a 15-year mortgage or a 30-year mortgage.

Many people choose to pay on their mortgage loans for 30 years – some even think that a 30-year term is required for first-time buyers. The truth is, the standard length for home loan is not set in stone. You can, if you like, choose to pay off your loan in half the time with a 15-year mortgage.

Deciding on the right term for your first-time home loan requires careful thought. To figure out if you should take out a 15-year or 30-year mortgage, consider the advantages of each term option.
First-time home buyer mortgages

Benefits of 15-Year Mortgages

A 15-year home loan comes with several plusses. The advantages of choosing this mortgage term length include:

  • Paying off your mortgage more quickly – When you no longer have a loan payment, you can make easier preparations for retirement, work shorter hours and enjoy greater financial freedom.
  • Paying less interest – With a 15-year mortgage, you’ll put less money toward interest. Depending upon the amount you’re financing, this could add up to tens of thousands of dollars in savings.
  • Building home equity faster – As your loan balance decreases, your equity grows. This occurs with any home loan, but the rate is much faster with a 15-year mortgage.

Benefits of 30-Year Mortgages

Though a shorter first-time home loan term can be advantageous, taking out a traditional 30-year mortgage can be a smart move for many first-time buyers. The benefits of choosing a 30-year term include:

  • Having a lower mortgage payment – With a longer term, the monthly payments are more affordable. Keeping the payments low can make budgeting both easier and less stressful.
  • Freeing up money for other goals – By paying less on your home loan each month, you’ll be able to pay down debts, make home improvements and increase your savings. You can make higher payments if your budget allows, but you have the freedom to choose when to pay more.

Which Mortgage Term is Right for You?

The term length of your first-time home loan term will have a long-lasting impact on your personal finances.

Before making a decision between a 15-year mortgage and a 30-year mortgage, take a good hard look at your money situation. If you don’t have much in the way of extra income or savings, a shorter term with a higher monthly payment may not be in your best interests.

Also, consider your future goals. If you’re confident you can afford a higher mortgage payment and you’d like to eliminate your home loan soon to free up funds for the next stage in your life, a 30-year mortgage might be the right choice.

Not sure which mortgage term length to choose? The highly-experienced loan officers at Integrity First Lending can help you compare your options and find a favorable first-time home loan.

Integrity First Lending, serving the greater Salt Lake City area and the surrounding northern Utah communities, is here to guide you through every step of the mortgage process. For expert advice and answers to your questions about first-time home loans, contact our South Jordan or Tooele office today.

Advantages of HomeStyle Renovation Loans

With a Fannie Mae HomeStyle renovation loan, you can purchase or refinance a property and have funds for remodeling or repairs – without the need for a second mortgage, home equity loan or line of credit.

A HomeStyle loan is an easy and affordable option for financing major home improvement projects. If you’re looking to rehabilitate your current property or want to buy or refinance a fixer-upper, choosing one HomeStyle renovation mortgage instead of two separate loans can save you money and time. For a closer look at the advantages of this Fannie Mae program, read on.
Utah home renovation loans

Flexible Loan Options

One of the greatest benefits of the HomeStyle renovation program is its flexibility.

This type of home loan applies to owner-occupied properties, but borrowers can also take out financing for rental or investment properties and second homes in need of rehabilitation or remodeling. HomeStyle loans are available to first-time and repeat home buyers, and borrowers can choose fixed-rate or adjustable-rate mortgages.

Affordable Financing

A HomeStyle loan doesn’t require a large down payment or strong equity position.

To buy a single-unit property with a fixed-rate renovation loan, the HomeStyle program only requires borrowers to put down 5 percent of the purchase price. For homeowners who want to refinance, 5 percent equity is typically enough to qualify.

Renovation Possibilities

With a HomeStyle renovation mortgage, you can finance a vast range of home improvement projects.

Some loan programs place restrictions on the types of renovation projects homeowners can finance. The HomeStyle program specifies that any home improvements must add value to the property, but the possibilities are nearly endless. From finishing a basement and remodeling the interior to building an addition, performing structural repairs or even installing a swimming pool, homeowners have a wide array of options.

Is a HomeStyle Renovation Loan Right for You?

Are you looking to buy a home than needs a little TLC? Or do you want to refinance your mortgage and have money for home improvements or repairs? A Fannie Mae HomeStyle renovation loan could be your ideal solution.

But, the HomeStyle program is not your only choice. As we mentioned, you could get a home equity loan or line of credit. A second mortgage might also meet your needs. Or, you may prefer a FHA 203k loan, as it requires just a 3.5 percent down payment and has more lenient eligibility requirements.

If you’re ready to explore your renovation loan options and you live in northern Utah, the mortgage experts at Integrity First Lending can help.

With decades of combined experience in the home lending industry, our friendly team can explain the various financing options and find a solution that’s right for you. And with Integrity First Lending, you can count on having a smooth and easy experience. Contact our South Jordan or Tooele, Utah, office to discuss HomeStyle renovation loans today.

How to Get a Home Refinance Loan

A home refinance loan can benefit your budget in multiple ways. Mortgage refinancing can free up more money each month, help you pay off your house more quickly or allow you to consolidate your debts — and any of these advantageous outcomes can put you on better financial footing.

Are you ready for mortgage refinancing? To get started on a refinance loan for your Utah home, take the following steps.

How to refinance your Utah home

Set a Clear Goal

First, determine what you hope to gain by refinancing your mortgage. Whether you want a lower interest rate, lower monthly payments, more favorable loan terms or debt consolidation, setting a home refinance goal can help you achieve your desired outcome.

Review Your Credit Report

The better your credit score, the better home loan refinance terms and interest rates lenders will offer. Comb through your credit report before you apply, and resolve any reporting errors you find. And, consider ways to improve your credit score.

Research Your Home Equity

The amount of equity you have can play a role in mortgage refinancing. You may be able to get a home refinance loan with as little as five percent equity, but more is better. Lenders offer the best rates and terms to homeowners with at least 20 percent in equity,

Gather the Paperwork

When you apply for a refinance loan, lenders will want to review your finances. Be prepared to locate, print or download bank statements, pay stubs, federal tax returns and any other requested financial documents.

Prepare for an Appraisal

Before making a home loan refinance offer, some lenders may require an appraisal to determine the current market value of your home. If any lenders want appraisals, make sure to point out repairs or improvements you have made that boost its value.

Consider the Closing Costs

With a home loan refinance, you can expect a number of fees and expenses. You might be able to add many of the costs to the mortgage balance, but if you’d rather not increase the amount you owe, come to the closing with enough cash on hand.

Compare Rates with Multiple Lenders

Home loan refinance terms and interest rates vary from lender to lender, so shopping around is well worth your time. Compare mortgage refinancing offers from several lenders, looking at the details to determine which best meets your goal.

If you live in South Jordan, Tooele or elsewhere in northern Utah and are ready for mortgage refinancing, turn to the home refinance experts at Integrity First Lending.

Our friendly loan officers have decades of combined expertise in the lending industry, and we’re always happy to answer questions and offer advice. We can assist with all of your mortgage, renovation and investment loan needs, and the Integrity First Lending team strives to provide a top-notch customer experience.

Let Integrity First Lending find your ideal financing solution. Contact us to explore your Utah home refinance loan options today!

First-Time Home Loans – Is a Fixed-Rate Mortgage Right for You?

When you shop for a first-time home loan, you will come across a wide range of options. Fixed-rate mortgages are popular, as they come with several advantages. However, going with a fixed rate loan is not the right choice for every home buyer.

Getting a home loan that meets your individual needs is important, so consulting with a mortgage expert is well-worth your time. Meanwhile, for a general understanding of whether you may benefit from a fixed-rate loan, read on.

Fixed interest mortgage loans for first-time buyers

Advantages of Fixed-Rate Home Loans

Many first-time home buyers turn to mortgages with fixed rates because the benefits allow for easier budgeting. Reasons to consider this type of mortgage loan include:

  • Stable interest rate – The rate never changes, so market fluctuations are no cause for concern. At the same time, if the interest rate drops, you can refinance.
  • Payment predictability – Though the amounts that go toward principal and interest change over the life of the mortgage, the monthly payment remains the same.
  • Ability to pay down principal – Most first-time home loans with fixed rates do not have restrictive prepayment penalties, which means you can make extra payments without incurring fees.

Disadvantages of Fixed-Rate Home Loans

As we mentioned, a fixed-rate mortgage is not always the right solution for everyone who’s buying their first home. The drawbacks include:

  • High upfront costs – With a fixed-rate loan, the origination fees, underwriting fees and other closing costs are usually steeper than they are with other types of mortgage loans.
  • Eligibility requirements – Loans with fixed rates can be difficult to qualify for, and buyers who have poor credit or plan to make small down payments are less likely to get an approval.
  • Lockedin interest rate – If the interest rate is currently high, locking in that rate for a first-time home loan may not be a wise financial move.

Should You Consider a Fixed-Rate Mortgage?

Generally speaking, if the interest rate is currently low, locking it in for the lifetime of your first home loan can make sense. That said, not all home buyers benefit from this type of loan. You may want to consider an alternative mortgage option if any of the following describes your situation:

  • You are only planning to stay in the home for a few years
  • You have a low credit score and/or a small down payment
  • You want a loan with a lower starting interest rate

When choosing a mortgage, you will need to consider a number of personal and financial factors. To make the decision easier, get advice from a mortgage expert – like the professionals at Integrity First Lending.

Our friendly loan officers are happy to help first-time home buyers in northern Utah, and we have the skill, knowledge and experience to help you find a first-time home loan that meets your individual needs. The Integrity First Lending team can answer your questions, explain your mortgage options and help you every step of the way.

If you are planning to buy your first home in South Jordan, Tooele or in the greater Salt Lake City area, let Integrity First Lending make the process easier. To discuss fixed-rate mortgages and first-time home loans, contact us today.

 

To Become a Landlord, Consider an Investment Property Loan

The traditional path to becoming a landlord is to save up money to purchase a rental home. Taking out an investment property loan is a shortcut, allowing you to achieve your goals sooner.

However, when it comes to financing investment properties, the options are somewhat limited. Many programs, including VA home loans and FHA mortgages, are only open to borrowers who want assistance purchasing a primary residence.

If you’re interested in an investment property loan, talking to an expert in rental home financing – like the team at Integrity First Lending – is the best course of action. In the meantime, here’s a look at the basics on loans for investment properties.

Utah investment property loans

Conventional Home Loans

Conventional mortgages, or those not backed by the government, are an option for investment properties.

To purchase a rental home with conventional financing, you’ll need a solid credit score and a significant down payment – up to 20%, in some cases. Fixed-rate mortgages with 15- or 30-year terms are popular, but some adjustable-rate loans may also be good options for aspiring landlords.

Cash-Out Refinance Loans

If you have equity in your current home, a cash-out refinance loan may put you on the path to becoming a landlord.

With this financing solution, you’ll be refinancing the balance of your mortgage along with up to 80 percent of the loan-to-value (LTV) ratio of a rental home. You’ll end up with a new loan that covers both properties and has a single payment.

Qualifying for an Investment Property Loan

You may be ready to become a landlord, but are your finances in order? To qualify for a loan with a good interest rate, you should be in a strong financial position – you want lenders to know that you can afford to invest in a rental home.

For the best chance at an approval for an investment property loan with a favorable rate, experts say you should take steps to improve your credit score. Pay down your credit card balances, take care of any small bills in collections and, if possible, get added as an authorized user on an account with a good payment history.

Having a large down payment also improves the likelihood of being approved for financing and may even help you secure better loan terms. In addition, if you put down at least 20 percent, you can save thousands by avoiding mortgage insurance.

Consult with an Expert in Rental Home Financing

Investing in a rental home is a great way to boost your income, but finding a lender and securing financing may take a little ingenuity. If you’re ready to take the leap, having a highly-experienced loan officer at your side can make all the difference.

Integrity First Lending, based in northern Utah, can help you realize your goal of becoming a landlord. Our team of professionals has decades of combined experience in the mortgage and home loan industry, and we can tell you everything you need to know about qualifying for an investment loan.

For more information about Integrity First Lending, or to discuss your options for an investment property loan, contact our South Jordan or Tooele office today.