If you are looking forthe best mortgage rate in Utah for this year, you should consider one with an adjustable rate as consumer spending power may be weaker because of higher interest rates.
This, in turn, will limit your options for a home purchase especially in Salt Lake County and along the Wasatch Front, where real estate prices have gone up recently. In the last quarter of 2018, it cost $350,000 on average to buy a house in Salt Lake County compared to $325,000 year over year. Median prices along the Wasatch Front rose to $334,000 from $300,000 during the same period.
Why Adjustable Rates Make Sense
Adjustable rate mortgages are a better choice when the interest rate increases because it lets you pay smaller monthly payments in the first few years. Most home owners decide to refinance their house during the fifth or sixth year, so you may consider it as buying some time before you could move onto a fixed-rate mortgage.
If you already have an existing mortgage, refinancing it this year would not be a good decision for the same reason that rates may continue to increase. The good news, however, involves a higher home equity as property values also rise at the same time. You could take out a loan against the equity of your house and use it for improvement projects.
Higher home prices also indicate that it is a seller’s market out there. Those who plan to sell their property in the coming months will find it useful to do some upgrades, which could significantly uplift your asking price. Not only that, a shortage of listings means that demand from buyers will likely remain stable particularly if you are selling a house in Salt Lake City or nearby cities. This requires a good strategy since the high price growth has locked out many of aspiring home owners.
There are specific ways to secure the best mortgage rate in Utah, aside from finding a well-established mortgage company in the state. One of these things includes a credit report, which you could get for free once every year. It is important to review the listed details since any inaccuracies will affect your chances of approval for a loan.
You may be aware of how your credit score also influences the lender’s decision. In reality, they may use a different scale for determining the creditworthiness of applicants. Still, you should aim to have a FICO score closer to 850. Most creditors use it as a guide.
If you dislike the idea of variable rates, which means payments may go up and down, then consider a hybrid adjustable rate. A lender may set a fixed rate for the first three or five years of the loan, depending on your choice. After that, it will change to a variable rate. When choosing among different lenders in Utah, pick one that offers a comprehensive set of loan options to compare to the best rates. What do you think of having adjustable rate mortgages?