Utah Real Estate Financing | Home Loans | Financing Your Home Purchase in Utah
Featuring financial tips and information for real estate purchases. Serving Salt Lake City, Park City to Provo.

A home loan, or mortgage, is most simply described as a loan taken out so that you can purchase a home. Here we’ll explain the very basics of home loans so that you can at least have a basic knowledge of mortgages and how they work.

Basic Requirements To obtain a home loan you will need to be at least 18 years old and have the income required to be able to easily afford the loan payments. While many mortgages are placed on existing homes, you can obtain a home loan based on units, condominiums, new construction or land packages. Regardless of what you need, there is most certainly a home loan option to match your case.

Home loans are usually taken out for 15 or 30-year terms and your monthly payment will be based on the principal and interest rate. You may also find that some lenders require that your mortgage payment also include property taxes, insurance, etc.

Private Mortgage Insurance If you finance more than 80% of the property’s value then you may be required to purchase private mortgage insurance (PMI). With this type of insurance, your home loan is automatically paid off in the unfortunate event of foreclosure. You will also be required to purchase home insurance so that your property and the lender are protected in the event of a fire or other disaster.

There are essentially two different types of home loans available and each offers a wide range of repayment options.

Variable Rate Mortgage Loans In this case, the interest rate on the loan (a percentage you agree to pay on the funds borrowed) may change during the term of the loan depending on the economy. The interest rate on an ARM typically adjusts every six to twelve months, but it may change as frequently as every month.

Fixed Rate Mortgage Loans This type of home loan has a fixed rate of interest for a set term, usually 15 or 30 years. You can always refinance at a lower rate if interest rates become favorable in the future. But the interest rate for fixed rate mortgage loans tends to be higher than that of variable rate mortgage loans.

When applying for a home loan your credit report will be reviewed and you may be required to provide a number of other details, including: Employment and income records, Tax Returns for the last few years, List of assets, List of liabilities and what you owe, Your budget showing monthly living expenses so that you can demonstrate an ability to pay.

With this information you and your lender will be able to determine the kind of home loan and size of the right mortgage for you. In some cases, you can obtain a pre-approval or pre-qualified certificate, which shows how much you can borrow so that you can then shop for homes in an appropriate price range.