Financing Your Home

Financing Your Southern Utah Area Home

One of the first items southern Utah home buyers should consider is the important aspect of how you will finance your single-family home, condo or townhome. If you read the article on the southern Utah Home Buying Process, one of the first items on that list was the finance process by having a mortgage broker pre-qualify you for your home loan. This article will take a look at the important elements of securing a mortgage if you’re not paying with cash.

Qualification Requirements

While qualification requirements can change often, generally speaking, you can purchase a home valued of about 2.5 times your annual household income. Remember, the amount that you are able to borrow will depend upon these factors:

  • Your gross annual income
  • Your employment history
  • Your credit history
  • Your current savings
  • Your debt
  • The amount of money you have available for a down payment, closing cost and earnest monies

Types of Loans – Fixed-rate Loans

There are many types of home loan products available. For the sake of this article we will discuss the two most popular types of loans in use today. With a fixed-rate mortgage, the interest rate remains the same during the life of the loan. The most popular fixed-rate mortgages are 15-year and 30-year loans. With a fixed-rate mortgage you know what you can expect your monthly payments to be each month. The only time your monthly is apt to change is when your escrow account is either over funded or under funded.

Escrow Accounts & PITI

The escrow account is used to pay for your annual property tax and homeowner insurance if your monthly payment is based on PITI or Principal, Interest, Taxes and Insurance. Monthly payments are normally made into a special escrow account for your homeowner’s insurance premium and property tax bill. Depending on your mortgage company, this feature is sometimes optional.

Adjustable-rate Mortgage (ARM)

With an adjustable-rate mortgage (ARM), the interest changes periodically depending on whether the ARM is a 3-year or 5-year. ARMs adjustments are tied to an index. Please understand this fact – while the monthly payments that you make with a fixed-rate mortgage seldom change, payments on an ARM loan will likely change. When considering any type of home loan, remember this important fact, there are advantages and disadvantages to each type of mortgage. Having an experienced Stratum Real Estate Group real estate agent by your side and a trusted lending consultant to fully explain each type of mortgage is the best way to select a loan product.

The Adjustable-rate Mortgage Index

What is it? An index is an economic indicator that mortgage companies that service your loan use to set the interest rate for an ARM. Generally speaking, the interest rate that you pay is a combination of the index rate and a pre-determined margin. The three commonly used indices are:

  • The One-Year Treasury Bill
  • The Cost of Funds of the 11th District Federal Home Loan Bank (COFI)
  • The London InterBank Offering Rate (LIBOR)

So Which Type of Mortgage is Best for Me?

Unfortunately, there is no simple formula to determine which type of mortgage is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to remain in your Southern Utah home. Because of our experience, our team of highly trained Cedar City real estate agents will point you in the right direction of a trusted lending consultant so you will make the absolute smartest decision possible concerning the financing of your southern Utah home. Contact us today for your initial home buying consultation.

What Our Customers Are Saying

Great experience with Kelsea Burton

Kelsea helped us buy and sell our homes this summer. It was our first time selling so we had a million questions about the process and she answered them all with patience. Answered calls every time and always kept us updated. We got great deals on...

whitney bladen
Kelsea went above and beyond

Kelsea Burton went above and beyond to help us not only sell our home but also find our dream home! She handled any and all bumps in the road (that come with the process) with ease and because of that it was smooth sailing! (Or smooth selling! ;))...

Kylie Burton
Amazing Realtor

Kelsea is wonderful to work with. I would highly recommend her. She is sweet and knowledgeable and there when I need her.

Michelle Harrington
Thank you Shelby

Attn. Shelby Smith,

First, my son, Jim, and I wish to express our sincere gratitude for your counsel and information regarding inquiry of properties of the Cedar City area. We appreciated the personal friendliness and helpfulness of our vis...

james melching
Realtor Extraordinaire!!

We recently sold our home with the help of Marilyn Teed. She made the process very easy for us. She went above and beyond anything we expected from a realtor. As we were busy getting settled in our new place, she took care of many incidental thing...

Rick and Dianne Hadlock
Knowledgeable, Reliable, Trustworthy

Kelly Adams is an amazing Real Estate Agent. He is professional, trustworthy, patient, and extremely knowledgeable about housing options in the area. We were moving across country and he worked tirelessly with us. We ultimately felt very comfortab...

Sarah Brock
Excellent Experience!

We bought our home with Jason Spencer and had an excellent experience! Jason was very helpful through the entire process! He was always available which was very helpful as we were moving from out of state. We would definitely recommend Jason and S...

Travis and Keli Allen
Kelly Adams

Kelly did a great job helping us purchase some real estate!
He was prompt with good follow through for our
questions and concerns.

Eric Muller
Steve Barnes answered all our questions

Steve Barnes was extremely instrumental in us finding and buying our home! We were moving across the country and only had a few days to find our forever home. Before we came out to look at homes Steve answered all our questions and would hunt down...

Sarah Black
Honest and hard-working

Kelly Adams has been an amazing realtor! He is honest and hard-working. I know he had several other clients while he was selling our house, but it felt like we were his only client. He was very attentive. He respected our privacy and gave plenty o...

Tyree Jensen

Read More Testimonials »

IDX information is provided exclusively for consumers’ personal, non-commercial use, that it may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing, and that the data is deemed reliable but is not guaranteed accurate by the MLS.

This IDX solution is (c) Diverse Solutions 2020.