The low prevailing interest rate on mortgages spell good news for anyone looking to buy a home in Utah. You’re likely to get an affordable 3.9% on a 30-year fixed mortgage. Things get even better if you were to push up the repayment period as the 15-year plan would score you an impressive 3.6%.
Given the long-term financial implication of buying a home, it’s imperative that you get the best mortgage rate here in Salt Lake City. You’ve probably heard it before, but one can’t stress enough on the need to tread carefully when applying for a mortgage.
It saves you a fortune
As an industry insider would have you know, mortgage is mostly a numbers game. Being caught on the wrong side of these numbers hurts as they pack quite a kick. Worse still, they can haunt you for the rest of your life if you aren’t too careful.
A one percent difference in mortgage rate might not seem substantial, but when you factor the length of the loan, the numbers add up quickly. The amount interest payable on $200,000 loan with 10% down and rate of 3.5% is $110,000. The interest on a similar loan but at a rate of 4.5% works up to $148,332.
The 1% difference in mortgage rates on a 30-year home loan is worth $37,352. You only get to decide where the money goes. You have the option of using it to build your wealth or pay it out to the bank as interest.
Bridging the gap
Now, it would seem illogical for anyone, especially when struggling to make ends meet, would offer $30,000 of their hard-earned money to the bank. However, most homebuyers end up doing just that even more. Mostly it happens with first timers as they have a penchant for rushing through the mortgage process.
Since the crash of 08, lenders have tightened their lending guidelines to avoid getting into bad loans. As such, they take extra precautions to safeguard their investments. It’s these measures that cause you to part with the extra money after taking your mortgage.
Qualifying for a mortgage is a merit-based problem and will depend mainly on what the lenders find after running your background. They need to be sure that you can live up to your promises. Trouble begins when your history raises any form of red flags.
Eliminating red flags
A low credit score, income, high debt burden, and a checkered financial history are some of the common triggers that set lenders on guard. A credit score is your GPA equivalent in handling finances. Couple that with a high debt burden and a history of not paying your debts in full or on time and you trigger all manners of warning.
Fortunately, you can fix all these warnings and improve your chances of qualifying for a loan and the best possible interest rates. For starters, you’d have to find creative ways to boost your income and improve your money management skills.
Paying down your debt and all bills when they are due makes a great start. Reducing your debt burden and keeping current will all your bills helps to boost your credit score.