Non-Conforming Mortgage Basics and Common Needs

non-conforming mortgage needs

There are a number of different mortgage types and programs out there, and one that some people don’t fully understand is the non-conforming mortgage. While it’s true that there are many cases where this form of mortgage will be less desirable than its inverse, the conforming mortgage, there are also a few where it will be necessary for your needs — and as long as you navigate the waters properly, a non-conforming mortgage can be beneficial.

At Altius Mortgage and our partners with Mortgage Ogden, we’re here to offer a huge range of both mortgage originations and mortgage refinancing services, plus provide our clients with all the information they need about any loan program they’re considering. What is a non-conforming mortgage, and what are some of the situations where you might need to utilize one? Here’s a basic rundown.

Non-Conforming Mortgage Basics

In simple terms, a non-conforming loan is one that doesn’t meet bank or lender criteria for funding. This is in comparison to a conforming loan, which does meet these criteria.

Generally speaking, non-conforming mortgages are considered riskier than conforming loans because they’re not backed by Fannie Mae or Freddie Mac, the government-sponsored enterprises (GSEs) that drive prices and standards in the conventional mortgage world. This is why you’ll often see higher interest rates attached to non-conforming mortgages — to make up for the extra risk involved on the part of the lender.

In most cases, borrowers will tend to default toward more secured conforming loans. However, there are a few situations where you might need a conforming loan, which we’ll dive into in our subsequent sections.

Jumbo Loan

Jumbo loans refer to those where the price of the property is greater than the conforming loan limit, which currently stands at $510,400 in most parts of the country (this will vary in some states). In order to qualify for this type of mortgage, you’ll need a credit score of 700 or higher and a debt-to-income ratio no greater than 43 percent.

If you’re considering purchasing property in an expensive real estate market, then this is likely the loan you’ll be looking at. Unlike a conforming loan, where you’re able to put down as little as 3 percent, jumbo loans will generally require a 20 percent down payment in order to qualify.

Can’t Meet Conforming Requirements

If you have a low credit score, major debt or any other number of financial factors working against you, it’s possible that you won’t be able to qualify for a conforming loan — and in this case, you’ll need to look into alternative financing methods.

In these cases, subprime loans (mortgages with higher interest rates given to those with lower credit scores) may be your best bet. These will likely have stricter requirements in terms of both credit score and down payment, but if you can’t qualify for a conforming loan, they may be your only option.

Non-Warrantable Condo

Finally, in certain rarer situations where you’re looking to purchase a condo unit, you may find that the property doesn’t qualify for a conforming loan due to its status as a non-warrantable condo. These are generally newly built condos or ones with special assessment dues, and they can be more difficult to finance.

If you’re interested in purchasing a non-warrantable condo, you’ll need to put down a larger down payment (usually at least 30 percent) and may end up with a higher interest rate. You’ll also need to be extra careful in your choice of property, as these are generally considered more high-risk investments.

For more on non-conforming loans and why you might need one, or to learn about any of our mortgage rates or mortgage programs, speak to the team at Altius Mortgage today.

The Variables That Determine Your Mortgage Interest Rate

variables mortgage interest rate

Interest rate is one of the most important considerations for anyone looking into securing a mortgage and buying a home, as it will have a major impact on how much you’ll pay over the life of the loan. For this reason, it’s important that anyone entering the homebuying world understands the specific elements that go into determining the mortgage rate you’re eligible for.

At Altius Mortgage and our partners with Mortgage Ogden, this area is among our specialties. We offer some of the best mortgage rates in Utah, plus mortgage programs perfect for everyone from first-time homebuyers to those looking to refinance an existing mortgage. Here are the specific variables that play a role in your mortgage rate.

Credit Score

One of the single most important factors in your mortgage interest rate is your credit score. A higher credit score will lead to a lower interest rate, all other things being equal. That’s because a high credit score is an indication that you’re a low-risk borrower, and therefore more likely to repay your loan on time.

Now, to be clear, there isn’t a direct linear connection between credit score and interest rate. In other words, a small increase in your credit score probably won’t lead to a significant decrease in your interest rate. But if you have a good credit score, you’ll almost certainly get a lower interest rate than someone with poor credit.

For those entering this world, checking your credit score and taking steps to improve it (if necessary) should be one of your top priorities.

Down Payment Size

The size of your down payment will also play a role in your interest rate. A larger down payment indicates to lenders that you have more “skin in the game,” so to speak, and are therefore less likely to default on your loan. For this reason, making a larger down payment can lead to a lower interest rate.

Of course, coming up with a large down payment can be difficult, especially for first-time homebuyers. But if you can swing it, putting down 20% or more will put you in a much better position when it comes to negotiating your interest rate.

Loan Type

The type of loan you’re looking to secure will also affect your interest rate. For example, adjustable-rate mortgages (ARMs) typically have lower rates than fixed-rate mortgages, at least at the outset. But ARMs can be riskier, since the interest rate may increase over time. So if you’re looking for a lower interest rate, an ARM may be the way to go.

On the other hand, if you’re looking for stability and predictability, a fixed-rate mortgage is probably your best bet. You’ll likely have to pay a slightly higher interest rate than you would with an ARM, but your payments will stay the same for the life of the loan.

Home Location

One variable some gloss over is home location. But where you’re buying can actually have a significant impact on your interest rate.

For example, if you’re buying in an area with a high crime rate or poor schools, you may have to pay a higher interest rate. That’s because these factors make it more likely that you’ll default on your loan, and lenders will account for that by charging a higher rate.

On the other hand, if you’re buying in an area with strong market conditions, you may be able to get a lower interest rate. That’s because lenders see these areas as being less risky, and therefore more likely to result in on-time loan repayment.

Term Length

Another factor that will affect your interest rate is the length of your loan term. A shorter loan term (e.g., 15 years) will typically have a lower interest rate than a longer loan term (e.g., 30 years), all other things being equal.

That’s because a shorter loan term means you’ll pay off the loan faster, and therefore there’s less risk for the lender. So if you’re looking to get a lower interest rate, you may want to consider a shorter loan term.

Of course, a shorter loan term also means higher monthly payments. So you’ll need to weigh the pros and cons of a shorter loan term before making a decision.

Loan Program

There are also certain specific loan programs where you may be able to get a lower interest rate. For example, some government-backed loans (like FHA and VA loans) come with rates that are lower than what you’d find on a conventional loan.

So if you’re eligible for one of these programs, it may be worth considering in order to secure a lower interest rate.

Points Considerations

Another factor here is known as “discount points” or simply “points,” and it’s something you may be able to negotiate with your lender.

Essentially, points are a fee you pay upfront in order to secure a lower interest rate. Each point is equal to 1% of the loan amount, and the more points you pay, the lower your interest rate will be.

Of course, whether or not this is worth it depends on how long you plan on staying in the home. For example, if you’re planning on selling the home within a few years, it may not make sense to pay points for a lower interest rate. But if you’re planning on staying in the home for the long haul, paying points could save you a lot of money over time.

For more on the different factors that play a role in determining what your mortgage rate will be, or to learn about any of our mortgage rates, mortgage programs or other services, speak to our team at Altius Mortgage today.

Homeowner’s Insurance Vs Title Insurance for Homebuyers

homeowner’s insurance title homebuyers

When it comes to purchasing a home, there may be a few different types of insurance involved to protect both homeowners and mortgage lenders. Two of the most common and well-known here are homeowner’s insurance and title insurance — how do these differ, and why are they both important?

At Altius Mortgage and our partners with Mortgage Ogden, we’re proud to offer mortgage loan assistance to numerous clients, including first-time homebuyers who might not quite fully understand these different forms of insurance and why they matter. Here’s a primer on each of them so you have the proper information.

Homeowner’s Insurance

As its name suggests, homeowner’s insurance is used to protect your home in the event of damage or loss. This could be caused by a number of things, typically including:

  • Damage or loss to home or structures: If your home is damaged in a fire, a storm, or even in an incident of vandalism, your homeowner’s insurance policy will help to cover the costs of repairing or rebuilding your home. Be sure you know what your policy covers, as not all policies are created equal!
  • Damage or loss to personal belongings: Your possessions are also typically covered by homeowner’s insurance in the event of damage or loss.
  • Loss of use: If damage to the home causes it to be uninhabitable, your policy may help to cover living expenses incurred while the home is being repaired or rebuilt.
  • Liability: If anyone is hurt on your property, or if you cause damage to someone else’s property, your homeowner’s insurance policy may help to cover the costs.

Essentially, homeowner’s insurance is meant to help you rebuild your home and replace your belongings in the event of damage or loss.

Title Insurance

Title insurance, on the other hand, is used to protect the title of your home — and therefore your ownership of the home. This means that if someone tries to sue you claiming they have a better claim to your property than you do, title insurance will help to cover the costs of defending your title. It can also help to cover damages if someone does successfully sue you for ownership of your home.

Title insurance is not as well-known as homeowner’s insurance, but it’s just as important — especially if you’re buying a home. Make sure to talk to your mortgage lender about getting title insurance as part of your purchase.

Both homeowner’s insurance and title insurance are important when purchasing a home, and it’s important to understand the differences between them. Talk to your mortgage lender about what type of insurance is best for you.

For more on either of these forms of insurance, or to learn about our great mortgage rates and related services, speak to the staff at Altius Mortgage today.

Making an SLC Home Offer That Impresses a Seller

home offer impresses seller

There are a few parts of the homebuying process that are very important for buyers, and one of these is making a quality offer if you’ve found a home you love. Many are aware that the home market today is still very much a “seller’s market” with lots of demand, and this only increases the need for a great offer that will not only show the seller you’re serious, but also potentially help you stand out from other buyers.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to help with numerous parts of your homebuying process in Salt Lake City or any other part of Utah, including themes like making offers to sellers and providing you with proof of purchasing power for these offers. Our services are often especially beneficial to those entering the home market for the first time, as these people may not have any experience with making offers and could use some advice on how to do so. Here are several tips we often provide to clients on how to make an offer that will impress the seller and give you a great chance at being the winning bid.

Show Proof of Purchasing Power

First and foremost, no seller is going to take your offer seriously if you don’t have the ability to actually complete the purchase. This is why it’s important to provide evidence of your purchasing power upfront in your offer letter or package.

The most common form of such proof is the use of a pre-approval letter, which is a document from your lender that states you have already been approved for a mortgage up to a certain amount. Other common forms of proof include recent bank statements and/or pay stubs that show you have a healthy income and can afford the monthly payments on the new home.

If you’re not quite there yet in terms of getting pre-approved, don’t worry – you can still make a solid offer by providing a letter of intent instead. This is a document that states your intention to get pre-approved and buy the home if your offer is accepted.

Earnest Deposit

There are certain types of deposits that can be made during a home offer, and one of these is called an earnest deposit. This is a cash deposit that you submit to the seller alongside your offer, and it shows that you’re serious about buying the home. It’s meant as a “good faith” deposit of sorts, and if the deal does not end up going through, this money will simply go to the seller.

Ideally, your earnest deposit should be large enough to show the seller that you’re serious but not so large that it will bankrupt you if the offer is rejected. A good rule of thumb is to make an earnest deposit that’s about 1-2% of the purchase price.

In addition to impressing the seller, an earnest deposit can also help your offer stand out from others by proving that you’re willing and able to put your money where your mouth is.

Quick Inspections and Other Deadlines

While this won’t be the case for every seller necessarily, many are looking for a quick process that allows them to move on with their lives. This is why it’s important to come in with a offer that has some quick inspections and deadlines associated with it.

For example, you could propose a 72-hour inspection period in which the seller can’t accept any other offers and you will have the chance to fully inspect the property. You could also propose a deadline for the seller to accept or reject your offer, again putting them in a position where they can’t wait too long.

All of these measures show the seller that you’re serious about buying their home and that you’re willing to move quickly if they are as well.

Consider Contingencies

Home offers will also typically come with certain contingencies, which are terms that must be met in order for the sale to go through.

One of the most common contingencies is the mortgage contingency, which states that you’re only able to buy the home if you can get approved for a mortgage at a certain interest rate. This contingency protects you as the buyer in case your financing falls through, and it’s important to include it in your offer.

Other common contingencies include the home inspection contingency, which gives you the chance to have a professional inspect the property before you buy it, and the appraisal contingency, which states that you will only buy the home if it appraises for a certain amount.

In some cases, you may consider waiving certain contingencies in order to make your offer more attractive to the seller. However, you should only do this if you’re absolutely confident that you can still meet the terms of the contingency if it’s waived.

Don’t “Start Low” On Offers

This is not a bartering or haggling process, and you should never start your offer low in the hopes of getting the seller to come up with a better number.

In fact, this will likely have the opposite effect and make the seller less likely to negotiate at all. Instead, make a strong offer that is backed up by evidence such as pre-approval from your lender and a large earnest deposit.

The bottom line is that you want to make an offer that shows the seller that you’re serious, capable, and ready to buy their home right now. By following the tips above, you can put yourself in a much better position to do just that.

For more on how to make a great home offer that will impress your seller, or to learn about any of our loan officer services, mortgage rates or other solutions in SLC and nearby areas, speak to the staff at Altius Mortgage today.

What Low Mortgage Rates Mean for Homebuyers

low mortgage rates mean homebuyers

If you’ve been thinking about entering the homebuying market recently, chances are you’re aware that mortgage rates have been quite low for some time now. While they have finally begun to rise again in small ways, the current state of mortgage rates is one of the most favorable to buyers we’ve seen recently — but what does this actually mean to you as a buyer?

At Altius Mortgage and our partners with Mortgage Ogden, these are precisely the kinds of questions we’re here to answer as we assist prospective homebuyers with a huge range of mortgage options, including mortgage refinancing for those who already own a home. Here’s a primer on why mortgage rates are relatively low, what this means for buyers, and what you should be thinking about in this area as you move forward.

Why Mortgage Rates Are Low

There are three major factors that have contributed to such low mortgage rates over the last couple years, including:

  • Economic uncertainty: Due to both COVID-19 and other factors, there is a great deal of uncertainty when it comes to both our domestic and international economies. This sense of general unease about investments has caused people to move their money towards relatively safer options like low-interest mortgages or certificates of deposit.
  • Low federal interest rate: Partially in response to that economic uncertainty, the Federal Reserve lowered the federal funding rate to affect the prime interest rate. This, too, contributed to lower rates for mortgages both big and small.
  • Lively hosing market: As the pandemic caused people to rethink their living situations as a whole, the housing market remained relatively strong as buyers continued to seek out homes. This contributed not only to low mortgage rates but also pushed homeownership higher than it has been in years.

What Low Rates Mean for Buyers

While low rates are very important to many buyers, and may allow them to enter the homebuying market sooner than expect, they aren’t the only factor at play. In particular, current low interest rates are mitigated by the fact that supply of homes is so low.

This is a major “seller’s market” in terms of real estate today, meaning that homes are selling fast and for high prices. So while you may be looking to capitalize on low interest rates during this time period, know that many others will be doing the same.

Impact on Refinancing

If you’re a current homeowner considering a mortgage refinancing, this picture is a little more clear-cut. For most refinancing needs, lower interest rates are purely a good thing — they mean that you can get a lower rate, and get it faster. Many who are considering refinancing look to time the process for when rates are at their absolute lowest.

For more on what mortgage rates really mean for those looking to obtain or refinance a mortgage, or to learn about any of our mortgage rates or programs, speak to the team at Altius Mortgage today.

Visual Areas to Consider When Touring a Home for Sale

visual areas touring home

For many who are entering the homebuying market, one of the most exciting parts of this process is visiting prospective homes for sale through a variety of tour or open-house formats. And while this part of your home search is often fun, it’s also one where you should be paying attention to a number of factors — and the general condition of the home is at or near the top of any such list.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to assist with a wide range of elements of your homebuying process, from numerous loan programs — including those for first-time homebuyers — to help with pre-approval and other elements that are important to have completed as you hit the home search market. When you’re touring or visiting homes, whether on your own or with your realtor, here are some of the top visual cues we recommend keeping an eye on, plus how they pertain to overall quality and what certain issues might be telling you.

Know the Home’s Age

First and foremost, before you even begin looking around at various home components, find out when the home was built. While certain elements of older homes are desirable, such as hardwood floors or built-in cabinetry, it’s also important to understand your main living spaces in terms of what they’re composed of and how long they’ll potentially last you — plus their own level of energy efficiency.

The general rule is that newer homes are often more energy efficient and may better meet your needs as you live there for longer periods, no matter the location or other factors. For instance, if you have a growing family or plan to have one in the future, you’ll want a home that has room to grow without making too many potential changes to the layout of rooms over time.

Cabinets

One of the first visual areas to take a look at when you’re touring a potential new home is the cabinets and countertops in the kitchen. What’s often most important to note is whether they seem well-made and how they’ve held up over time, especially if they’re painted or stained wood cabinets.

Also, look for any visible areas of damage — such as dings or scratches that were haphazardly filled in with paint — and overall wear, including any that might be along edge areas or even on doors. If these signs are prevalent throughout the kitchen, it may be pointing to an overall lack of quality in what’s offered for sale.

On the flip side, if the cabinets seem relatively new and free of damage, that’s a major plus — but it’s also important to know what the expected lifespan really is for them. If they were installed towards the end or shortly before you toured the home, be sure to note this information so you know how much use they’ll have in terms of longevity.

Baseboards

Another major area to keep an eye on within any home you tour is the condition of baseboards. While these aren’t always the most attractive elements within a home, they’re designed to keep out drafts and can tell you quite a bit about not only energy efficiency but also how much care has gone into certain areas of the home’s maintenance over time.

When visiting prospective homes, pay attention to any areas where the baseboards are cracked or significantly damaged, as well as how close to the floor they go — if there’s space between them and the flooring itself, it could be an indicator that the house has issues with things like moisture.

Appliances

One area that sometimes moves slightly beyond a pure visual inspection is the appliances in the home you’re touring. It’s generally acceptable to turn on several items or at least open up the refrigerator and inspect the inside, though if it’s off-limits don’t be afraid to ask why.

A few appliances to prioritize here are the stove-top, oven and microwave, since these are used most frequently in many homes. While looking at overall condition is important, it’s also wise to take note of how the appliance looks when off — if there are scratches or other signs of damage along the top or sides, it could be pointing towards potential problems down the road.

Water Pressure

Another area of turn-on and turn-off that you should be including in your basic visual inspection of any home is the water pressure. While it’s not always easy to judge, you should be able to turn on the faucets throughout the home and get at least enough out to wash your hands or take a shower — if this isn’t the case and you’re not sure why, it could be an indicator of problems with plumbing or even outdated elements.

Fuse Box and Circuit Breakers

While you should never touch or mess with these elements in any home, it’s important to note the condition of this part of your potential new house. If everything is relatively new-looking and well-kept, that’s a good sign — but there are other potential signs you should be aware of.

For instance, if multiple circuits seem to have been added at once or the wiring has been altered, that could be an indicator of electrical issues within the house that you should look into. On the flip side, if only one circuit has been added and there are no signs of recent repairs or alterations to elements like wiring or fuses, this is a plus — just note how old the box itself looks so you have some idea of its next potential replacement date.

For more on the visual signs of a home that’s in good condition while you’re touring the market, or to learn about any of our mortgage rates or home loan services, speak to the team at Altius Mortgage today.

Understanding Transfer Taxes During a Home Sale

transfer taxes home sale

If you’re a homeowner planning to move into a new home, and therefore selling your old one, it’s important to note that your sale isn’t necessarily over once paperwork has been signed. Specifically, one additional area you may have to cover is the realm of transfer taxes, which are included in closing paperwork and have to be handled before the sale can become final.

At Altius Mortgage and our partners with Mortgage Ogden, our quality loan officers are here to walk you through the entire process — we’ll assist you not only with securing a loan and purchasing your new home, but also with important details on closing out prior home sales. Whether you’re the buyer or the seller in a given home sale situation, what are transfer taxes, what do they cover, and which exemptions might a given seller be eligible for in this area? Here’s a basic primer.

Transfer Tax Basics

Transfer taxes in a home sale situation refer to taxes that are collected by the local city or county when the property is bought or sold. This tax becomes active when the exchange becomes public record.

These taxes will also be called documentary transfer taxes or excise taxes, and they’re collected from the purchaser by the local government. The amount is paid at closing, and it can be paid out of both parties’ funds — for example, if your buyer had part of their savings go towards meeting this requirement, you as the seller benefit by not having to pay extra on top of your own closing costs.

Transfer taxes also apply to estate and gift taxes, as well. This means that if you’re purchasing a loved one’s estate after they’ve passed away, or even in many cases where you’re inheriting such a property, these taxes will apply.

Who Pays Transfer Taxes?

In the vast majority of cases, sellers pay transfer taxes. There  are some common exceptions where this rule doesn’t apply — for example, if you’re purchasing a home with the help of your parents (or other family members), and they’re making up at least half of the sales price, then transfer taxes can be paid out of their funds.

The rules here vary from state to state; your best bet is to double-check your state’s laws and regulations on the matter, which you can typically do via a quick online search. In practice, while each local government has its own set of rules, the majority of states follow this general principle: If a husband and wife are buying or selling something together (or through an LLC with a name matching both of their last names), they’re usually able to avoid transfer taxes by one partner covering the cost from their own resources.

How Transfer Taxes Are Calculated

Generally, there are two formats for how transfer taxes may be calculated during a sale:

  • Percentage of the sale: This is a common arrangement, and it means that the total transfer tax rate imposed on a given property will be calculated according to a set percentage of the sale price. This percentage will vary from one region to another — in some areas, it may be as low as 1%, while in others, such as New York City’s five boroughs, it can be as high as 4%.
  • In increments: In other cases, you will have to pay a set amount of transfer tax per every thousand dollars the sale price of your property exceeds a certain minimum threshold.

In some states, transfer taxes will be even higher if your property is being sold for a large number, usually $1 million or more.

Transfer Tax Exemptions

Now, there may be some cases where sellers are exempt from transfer taxes. These include:

  • Gifts: Legitimate, good-faith gifts where the buyers purchase the property with no defects and pay full value.
  • Full value lien: If the amount owed on a lien is more than the value of the property, it will be exempt from transfer taxes.
  • Agent to the principal: If a buyer or grantee uses their own funds rather than a mortgage loan to purchase a property, it will be exempt from transfer taxes.
  • Inherited property: If a buyer inherits a property from a deceased relative, they won’t have to pay these fees.
  • Certain commercial leases: Certain commercial property leases — those over a year but under 35 years in length — will be exempt from transfer taxes.
  • Debt collateral: In some cases, sellers will transfer a property as a debt collateral, which may allow them to avoid transfer taxes.
  • Government agency: In cases like foreclosure or others where government agencies receive the title of the home, transfer taxes are waived.

Are Transfer Taxes Tax Deductible?

Because they are used to legally transfer a real estate title, the answer here is no — transfer taxes are not tax deductible. There is but a single exception here: If the property is purely a work expense, it will generally allow transfer taxes to be deducted at the end of the year. For the record, this does apply to rental and investment properties, so those in these situations must take care to properly deduct from their taxes each year.

In some cases, sellers will add transfer taxes to the cost basis of their property, which is used to calculate your profit or loss upon sale. This is usually done when you are selling or transferring your property to another person or business, especially if the total value of the sale, minus any fees and other deductions, are taxed as capital gains.

For more on transfer taxes when selling or buying a home, or to learn about any of our mortgage rates or other services in the real estate market, speak to the pros at Altius Mortgage today.

First-Time Homebuyer Errors: Timing and Future Expenses

first-time homebuyer errors timing

In parts one and two of this multi-part blog series, we’ve gone over some of the most common errors to avoid if you’re a first-time homebuyer entering the market. While there are several such areas to steer clear of, you also have resources available to you for assistance, including your loan officer and realtor.

At Altius Mortgage and our partners at Mortgage Ogden, we’re proud to offer several loan programs that are ideal for first-time homebuyers, plus expertise on how to navigate the market if you’re entering it for the first time. In today’s final entry into our series, we’ll go over some of the errors we sometimes see later in the process, plus what you should do to avoid them and ensure you’re in a great position moving forward with your new home.

Other Credit Applications

It’s vital to be aware of the timing gaps between when you apply for your mortgage and when the home sale will actually be closed, which will be a few weeks in most cases. And during this in-between period, we strongly recommend taking on any other kind of credit application, whether for a car loan, furniture purchases or any other reason.

This is because your credit is still a deciding factor during this period, where your lender will be evaluating your credit score, debt-to-income ratio and your income to determine your creditworthiness. If you apply for other forms of credit that require hard inquiries, these will lower your credit score and may increase your debt-to-income ratio, neither of which will look good to your lender. As a result, your mortgage interest rate or fees on the mortgage might be changed, or your closing could be delayed.

Shopping Too Early

While we know the home shopping part of this process is what you’re really looking forward to, you can’t be impatient here. If you’re evaluating or even visiting properties before being at least pre-qualified or pre-approved for a mortgage, you’ll be doing so blind – without a true idea of your purchasing power or the ability to make a competitive offer. Instead, speak to your loan officer about the steps for being pre-approved.

Improper Cost Calculations

Finally, one mistake some first-timers make is miscalculating various long-term expenses as they close on their home. In some cases, these refer to various homeownership costs, including utilities, homeowners’ insurance and related expenses. In others, they’ll refer to repair or renovation needs that are required in the home, including some that will present safety or long-term property risks if they aren’t remedied.

For more on how to avoid common pitfalls among first-time homebuyers, or to learn about any of our home loan services or mortgage rates, speak to the staff at Altius Mortgage today.

First-Time Homebuyer Errors: Programs, Savings, Points

first-time homebuyer errors savings

In part one of this multi-part blog series, we went over some of the common errors first-time homebuyers often make as they enter the market. Many of these are based on simple misunderstandings or myths that have arisen over time, but there are also some simple resources that will allow you to avoid these risks.

At Altius Mortgage and our partners with Mortgage Ogden, our quality loan officers are here to serve as one of these resources, assisting clients with numerous loan programs ideal for first-time buyers and providing several other areas of expertise. What are some of the other common issues we see our first-time buyer clients get wrapped up in, and how can you avoid these?

Missing Out on First-Timer Programs

As we just noted above, and as all first-time buyers should be aware, there are several programs out there that are either specifically designed for you or are often used for buyers in your position. These allow for themes like lower down payments, moderate interest rates or other benefits – but as a buyer, you have to do your research and determine which of these might be beneficial to you, something your loan officer will help you with.

Here are some of the specialty loan programs you might be eligible for:

  • FHA loans: These loans, backed by the Federal Housing Administration, allow for down payments as low as just 3.5% of the purchase price. In addition, they also have lower credit thresholds than other loan types, allowing you to qualify even if you might not have for a conventional loan.
  • VA loans: These loans are guaranteed by the US Department of Veteran’s Affairs, and are for military members, veterans and certain spouses. They allow for no down payment and 100% financing.
  • USDA loans: Meant for homes in rural areas, these loans are backed by the US Department of Agriculture and also allow for zero down and 100% financing.

Running Savings Dry

While you might use a sizable chunk of your savings for a down payment and closing costs on your home, it’s important not to sap them completely. It’s vital to leave funds available for unexpected repairs or costs once you move into the home, plus things like moving expenses. This is another area where our loan officers will be happy to provide basic advice.

Misunderstanding Discount Points

For some, the use of discount points – fees you pay up-front to reduce your interest rate down the line – might be valuable. Whether you go for discount points will depend on the break-even period, or how long it takes for this up-front cost to be exceeded by the monthly savings you’ll receive from a lower interest rate. In reality, only a small percentage of buyers will truly benefit from discount points, and you should inquire specifically with your loan officer about their benefits before considering them.

For more on how to avoid common first-time homebuyer errors, or to learn about any of our home loans or mortgage rates, speak to the staff at Altius Mortgage today.

Ogden First-Time Homebuyer Errors: Credit, Quotes, Down Payment

first-time homebuyer errors credit

While entering the homebuying and mortgage market for the first time may feel somewhat intimidating to some people, the reality is that you’re in a much better position here than your parents would have been a decade ago when it comes to information and resources. Due primarily to the internet and our connected society, including resources like this blog, homebuyers have numerous robust resources at their disposal to help them navigate the mortgage and home purchase process.

At Altius Mortgage and our partners at Mortgage Ogden, we’re here to help with not only numerous loan programs geared specifically to first-time homebuyers in Ogden and other parts of Utah, but also important information and resources to help you move through this process – including the ability to work with our great loan officers to receive financing. Our officers will inform you on numerous areas of this process, including helping you steer clear of a few of the mistakes first-timers often make in several different realms as they enter the mortgage and homebuying world. This multi-part blog series will go over several of the most common errors and how you can avoid them.

Lack of Purchasing Power Understanding

First and foremost, you have to have an understanding of the purchasing power at your disposal before you move any further. That is, how much home can you realistically afford, based on both the down payment required and the expected monthly payments – and how these compare to your household income.

This is a great example of an area where modern resources make things simple. While your parents might have had to do this math by hand, today there are numerous quality mortgage calculators online, including on our Altius Mortgage site. These will allow you to plug in basic numbers for your income and expenses, then get a broad idea of what you can afford.

Avoiding Credit Areas

Credit is vital for any mortgage application, and it’s a simple reality that you will have to scrutinize yours a bit during this process. Especially if your credit is subpar, but even if it’s not, you should plan to take the time to look up your credit score and request a copy of your credit report from bureaus so you can check it for errors.

Single Rate Quote

Just like any other area where you have numerous options, you should be comparing the available rates that are out there. Don’t simply take the first rate you’re offered – check if you might be able to get a better number by applying with multiple lenders.

Small Down Payment

Down payment is a curious area within the mortgage world. On the one hand, it’s a complete myth that you must have 20% of the purchase price for a down payment no matter what – there are numerous programs that allow for much smaller down payment amounts, as low as zero down or 3.5% down in other cases.

However, lower thresholds don’t mean the down payment isn’t important. Putting too little money down will mean your remaining principal balance and interest payments are high, and this will put some buyers in a position they can’t afford. In some cases, it might be prudent to wait six months or a year to add to your down payment savings before you enter the market.

For more on first-time homebuyer mistakes to avoid, or to learn about any of our mortgage loan programs or mortgage rates in Ogden and other parts of Utah, speak to the staff at Altius Mortgage today.