Finding the best mortgage lenders in Utah consist of important steps. It is not about finding a lender who offers you the lowest interest rates. You need to do some research and look out for a number of factors.
If you plan to borrow a mortgage for building a home or buy your second home, here are some important steps to follow.
Table of Contents
1. Check your Current Credit Score
The credit score is used to determine a borrower’s ability to repay a mortgage on time. The mortgage lenders will only lend you some money if you meet the minimum score. Moreover, mortgage lenders will take into consideration the credit score to determine the interest rate at which to lend money.
Most mortgage lenders will shun away from borrowers with a poor credit score. On the other hand, borrowers with a high credit score enjoy a better bargaining power on interest rates. Consider that mortgage lenders will charge a high interest rate as a measure to cushion the lender from the likelihood to default payment.
What is your current credit score? Check credit score online, to see if mortgage lenders in Utah will be willing to lend you some money.
If your credit score is poor, here are the steps you should take to improve credit score include:
- Ensure you settle the due bills on time. This includes utility bills and cell phone payments
- Pay off the existing debt and ensure low credit card balances
- Consider setting up payment reminders
- Avoid opening new credit accounts unless where it is completely necessary
- Check your credit score and remove any incorrect information
- Increase your income to reduce the debt to income ratio
The procedures above will go a long way in helping you to improve the credit score. if you have a high credit score, mortgage lenders will be willing to receive and process your request.
2. Compare and Contrast Mortgage types
Home mortgages fall in different classifications. We have a conventional home mortgage and special home buying programs. The conventional home mortgages are the normal mortgages that are offered at a 20% down payment and require a high credit score.
The special mortgage or special home buying programs are either zero down payment mortgage or the low down payment mortgages. Here is an overview of the different home mortgages available in Utah.
- The Conventional home mortgage: This is a home buyers loan offered by the mortgage lenders and does not feature any form of government support. Therefore, conventional home mortgages are available through and guaranteed by private mortgage lenders in Utah.
- VA Home Mortgage: The VA home mortgage is a zero down payment mortgage available to veterans or service members and their surviving spouses. The US Department of Veteran Affairs guarantees VA home mortgages.
- The FHA Home mortgage: The Federal Housing Administration is a Government guaranteed mortgage, and it is available at just a 3.5% down payment.
- USDA Home Mortgage: The USDA home mortgage is a zero percent home loan available to those looking to purchase property located within the eligible rural and suburban areas.
Each of the mortgage loans we have looked at is available at different interest rates and features some unique requirements. Check whether your preferred mortgage lender provides the specific mortgage type you are looking to apply.
3. Research mortgage lender in Utah
Mortgage lenders are not alike. While some will require a high down payment, others will provide mortgage loans with low down payment and at a lower interest rate. Moreover, some mortgage lenders will charge a low-interest rate with high cost of loans, while others charge high interest rate, but overall, the cost of the mortgage is low.
When you have finally determined that you have an eligible credit score, the next step is to compare between the mortgage lenders to identify the best among the available options. You can research about mortgage lenders online, or visit the loan officers to compare what products they have.
4. Get a Pre-Approval Letter
While in the market for a house to buy, you will need the mortgage pre-approval letter to verify to the seller that you already have an offer from the mortgage lenders. Therefore, consider the mortgage pre-approval letter as a document that shows you have met all the challenges associated with borrowing a mortgage.
You can collect pre-approval letters from multiple mortgage lenders. Do not forget that the pre-approved amount is the maximum amount that the lender is willing to offer you as the borrower. In that regard, some mortgage lenders will offer more than you actually need to buy a house. When applying for a mortgage, be sure to stick within the set budget to avoid problems when it is time to repay the mortgage.
5. Ask the Mortgage Lenders Plenty of Questions
Go through the mortgage application forms and check the guidelines/instructions offered by the mortgage lender. The best mortgage lenders in Utah will ensure they answer all the questions asked by the borrowers. You may consider coming with your spouse for one of those meetings with the mortgage lender. This provides you room to ask maximum questions clearing any doubts.