Tag Archives: finance

Here’s Why You Should Pay More Than 20% Down Payment on Your Ogden Home

A couple looking at their new homeNext to Salt Lake City, Ogden, Utah is one of the best places to set up a business or start a career. The historic city is also a transport hub, and with many universities around, it is teeming with new and young talent. Most of all, the cost of living is affordable, according to Sperling’s Best Places.

When it comes to housing, property prices are competitive with a median price of $180,000. Note, though, that appreciation has been strong over the past few years and that it may increase up to 4% by 2018. There’s no better time to buy a property there than today, but then how much should be your down payment?

Utah is no different from other states. It can vary from zero to 20%, and it depends on the lender. Some may allow you to pay as low as 3.5%. But if you want to save money, you should aim for something higher than 20%.

Avoid Private Mortgage Insurance

One of the reasons to increase your down payment is to avoid paying private mortgage insurance. Also known as PMI, it is a type of insurance policy that allows the lender to make a claim in case you default on your home loan. In other words, it protects the lenders, not you.

While PMI allows you to buy a house with a very small down payment, it also means additional costs. Although you can cancel it, you can do so only when your loan-to-value ratio is at least 78%. So you may end up paying this for months or a few years.

How to Avoid PMI

If you want to stop paying PMI, then you need to reduce your credit risks. There are two ways to do that. One, you can add improvements into your home to increase its value or equity. The second, and the easiest as what Wasatch Peaks Credit Union mentioned, is to ask for down payment assistance in Ogden. A credit union can provide you with the money you need not only to pay off the down payment but cover over 20% of the home loan.

Your life in Ogden doesn’t have to begin with a huge mortgage. You can make it more affordable by avoiding PMI and getting the assistance you need.

Construction Loan: Credit and Credit History Requirements

Construction Loan

A construction loan is different from other loans since lenders would be taking a huge gamble in providing funds for something that’s yet to be built. That being said, the credit requirements for construction loans are much more stringent than other loans.

What are the Basic Credit Requirements?

As with any loan type, lenders have their own credit requirement regarding credit scores. Conventional loans, such as VA loans and FHA loans, with a loan-to-value (LTV) ratio of 80% or higher are backed with mortgage insurance to guarantee lenders that they’ll be compensated should a borrower defaults on the loan.

With construction loans, there’s no guarantee. Lenders are taking the risk of not getting paid in case borrowers default on their loans. Likewise, lenders keep construction loans in their portfolio because there’s no demand for them. This means that you must have an outstanding credit score to qualify for a construction loan, explains American Loans and other loan officers in Utah.

Outstanding credit usually means a 750 score or higher, which is true if the amount of the loan exceeds the $417,000 conforming loan limit for the majority of loans. If the loan is lower, however, some lenders might consider credit scores between 680 and 700, which are subject to compensating factors. These factors include a stable and long income or employment history, financial reserves, and low debt-to-income or DTI ratio.

What About Credit History?

In general, you should demonstrate your ability to repay your debts on time, every time, and your responsible use of credit available to you. Your credit history shouldn’t have missed or late payments spanning the past two years, with minor exceptions subject to certain conditions. Likewise, it must be free of bankruptcies, foreclosures, or other credit issues, or if there are, they should be four years or more behind you. Additionally, your history shouldn’t have any unresolved federal debts, judgments, and collections.

Lastly, take note that lenders would also factor in your credit utilization rate. This means that you’ll be considered a bad credit risk if you use your entire available credit. That said, when you apply for a construction loan, make certain that you have less than 20% of your outstanding available credit.

Thinking of applying for a construction loan? Know if you’re qualified based on the above-mentioned info.

Newlywed Vows When Buying A New Home

Buying a House in Salt Lake City

Buying a House in Salt Lake CityIt’s a sad fact that one of the top causes of divorce in the U.S. is arguing about finances. Newlyweds like you and your partner want to avoid that sort of situation, especially when you intend to buy a new home in Salt Lake City. Here are a few pointers to avoid money problems while you’re in the process of property purchasing.

Set Goals

Whether it’s creating your monthly budget or increasing your savings, you need to clarify your priorities and objectives with each other. Create monthly and yearly financial plans. Decide on what needs are required for your everyday living, then include the other projects carefully so you don’t destroy your budget or your relationship.

Decide Together

Whatever projects you plan, or purchases you intend to make, remember that you’re in this together, no matter how big or small the decisions. Communication is a requirement for married couples. Your openness with your partner regarding spending habits, payment priorities, and recreational expenditures is critical in keeping a good credit score. This gives you a better chance at pre-approval when you buy your new house.

Make a Commitment

When you set goals and make that decision to buy (whether it’s a house, car, or vacation tour), commit to complete it. You made a commitment to each other during your marriage vows. Making decisions together tests those vows. Altiusmortgage.com reminds that home ownership is a big step. For you to reap the rewards, commit to paying your loans on time.

Having the correct financial mindset is critical in a good marriage. Setting your goal, owning your house, and having a family will demand such a mindset. Just remember that everything is better when you and your spouse do it together.