Tag - Utah Housing

Smart Refinance Tips During the Pandemic

You may be considering taking advantage of the current historically low interest rates by refinancing your mortgage to lower your monthly payment, consolidate debt, or move to a 15-year term. The Mortgage Industry is doing an excellent job of processing transactions under shelter in place.  But it’s more important than ever to help the process along by being well prepared. Here are a few tips to set you up for a smooth transaction and help you save money more quickly: 1.Continue making regular mortgage payments during the process 2. Do not take on any new debts.
  • -Taking on new debt will alter your debt to income ratio, which plays a major role I your pre-approval. Resist the urge to open a new credit card or upgrade your car,  until your loan transaction is finalized.
3. If your income or employment does change during the process, notify your lender right away.
  • -Changes happen, but you want to be sure to notify your lender so they can make the appropriate updates to your loan
4. Know that the appraiser may have to come into your home, so be prepared for this 5. Lastly and most importantly, quickly respond with all documentation that is being requested of you!
  • the faster we receive your documents the faster we can get your loan processed. If you documents are requested by our team please respond as quickly as possible.
  By following these tips you will set yourself up for a quick and easy refinance. Not sure how a refinance could benefit you? Reach out today to see how much you could be saving!
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Impacts of the Second Wave

It has been just over 6 months since the first case of COVID19 was reported in Utah. Now that 2020 is almost over and we are dealing with the impacts of the Coronavirus, the question is what can we expect from the rest of 2020? It is predicted that a second wave of increased cases could bring about another tough hit to the economy. Many say the second wave is already affecting Utah, as daily reports of positive cases are increasing and many schools have switched back to online distanced learning after less than 2 months of being open. Unemployment skyrocketed in the United States at the beginning of the pandemic due to continued stay-at-home orders, business closures, health concerns, and reduced demand for products and services. As a whole the country’s unemployment rate has seen little signs of improvement, but when you look at state levels, Utah is doing extremely well. Utah currently has the second lowest unemployment rate in the country at 4.1% according to the U.S. Bureau of Labor Statistics. Utah’s rate is less than half of the national rate of 8.4%. This means many of those who were furloughed or laid off at the beginning of the pandemic are getting to return to work. The Salt Lake Chamber reports that weekly unemployment claims in Utah have steadily declined for the last 16 weeks. “Utah’s economy continues along its path of improvement,” reports Mark Knold, Chief Economist at the Department of Workforce Services. “The unemployment rate dropped in August and remains one of the nation’s lowest. It speaks to the energy and prospects within the Utah economy.” Utah’s economy has done a lot to recover, but it still has a long way to go. Travel and tourism, as well as restaurants took a hard hit in Utah and are not expected to recover for years to come. While some industries are struggling in the pandemic economy others, like the housing market, are doing quite well. When the pandemic first hit in April there was a big drop in real estate transactions, but the market has since recovered.

The graph below illustrates how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. It also shows the strength of the recovery since the beginning of May. **Graph from realtor.com

Housing Market Recovery Index 2020

The current market is an insane seller’s market. Historically low interest rates and a shortage of inventory has kept the housing market moving this year. There was an unusually high demand from buyers during the homebuying season. Buyers are wanting to move faster to beat out other buyers and lock in a low interest rate. There has even been an increase in new construction home sales. Utah’s construction industry increased by 7.4% and continues to be Utah’s fastest growing industry over the past 12 months, as reported by the Salt Lake Chamber. The housing market is thriving so far this year, but what could the second wave mean for the market? Well we can make a few predictions from what we know. The Federal Reserve has said interest rates are expected to stay low for the next few years. With low interest rates still fueling the purchasing fire, the demand for housing is expected to remain strong for the rest of 2020. Due to the extreme buyer competition and shortage of homes for sale, home prices have begun to rise and could continue to rise further. In August, the median home price in Utah was $362,000, which is $37,000 more than 2019. When a market has low inventory, people are willing to pay more for a home in order to beat out other buyers competing for the same home. Sellers are finding the ball in their court in this market, as they are able to price their home competitively to get the best price for their home. The high demand from buyers and low inventory is expected to continue so we can expect to see home prices move up. With the pandemic continuing to put many people out of work we can also expect to see an increase of homeowners that will default on their mortgages and be forced into foreclosure. Although foreclosures are not expected to reach anywhere near the level we saw in the 2008 Great Recession, we can still expect to see a few people affected. And let’s not forget we have the impending presidential election this November. We all know the political climate can greatly impact the housing market, so it will be interesting to see which direction the election goes and how that affects the housing market moving forward into 2021. If the coronavirus pandemic has taught us anything it is that life can change at any moment. Although we don’t know exactly what to expect from the rest of 2020 by understanding the current trends and economic climate, we can have a better prediction of what’s to come.
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The Cost of Waiting

Interest rates have been at historically low levels this year due to the COVID19 pandemic. Many people have taken advantage of these great rates by purchasing a bigger or more expensive home with the same or more affordable payment. And even more people have taken advantage by refinancing their loan into a great low rate. However, even with rates at extremely low levels there are still many people wondering if it's a good idea to wait and see if rates get better before purchasing a home or refinancing. One thing that is not often considered when it comes to playing the waiting game with interest rates is the amount of money you could be saving while you wait for interest rates to lower.  Even if rates do improve in the future, the money that could be saved during the waiting period may be significant. A few hundred dollars saved per month could add up to potentially thousands before a lower rate opportunity arises. The forecasted appreciation is 2.0% in just the next  months. This means a home worth $350,000 today would be worth $7,000 more in 6 months. If you are playing the waiting game you are missing out on the potential appreciation and ammonization of your home. It could take many, many years to recoup the money you have lost. While it is true that we don’t know if rates are going to go lower, we do know that they will eventually go higher. Why risk the chance of missing out on a great low rate and savings each month?  It could take a long time for the savings of a lower rate in the future to make up for all the money that was lost by waiting for interest rates to lower again.  And remember, there's no guarantee that rates will go lower. Besides should rates drop significantly, we can always refinance you in the future. It's important to weigh the individual options for your situation and I'm here to help you do that. If you have any questions on a home purchase or refinance give me a call, 801.206.4343. I would love to answer any questions you have and discuss the best option for your specific situation.
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Housing Becoming Less Affordable Along Wasatch Front

  In March, researchers at the Kem C. Gardner Policy Institute found that our current market conditions are threatening to cause a crisis in Utah based on a growing housing shortage, while current home prices continue to appreciate. The Wasatch front housing market is stronger than ever with an increasing demand for both single family and multifamily rental units through the northern part of the state. New research shows that demand has outpaced wage growth which is causing a greater rift in affordability. Studies show that median home prices during the first three months of 2018 were not affordable for average wage earners in about 68% of the counties included in the US report. Incomes in Utah have failed to keep pace with interest rates, the report noted. The report also defined housing affordability as a unit where an owner or tenant pays no more than 30 percent of their household income toward housing costs — rent or mortgage. Davis, Utah and Weber counties, which are located along the Wasatch front rated less affordable than any prior quarter average during the first three months of 2018, while Salt Lake county was equal to its historic affordability index. Affordability often suffers during booming economic cycles, which frequently outpaces incomes for at least the start of these growth spurts. The risk is that individuals and companies could pull out of the area when they are no longer able to operate or live because of the expensive housing. Home values are going up quickly [but] the negative side of that is that the homes themselves are also becoming less affordable. Three factors that could help improve affordability in the short term are things like decreasing home prices, increasing wages and although cited as the least likely to happen, decreasing interest rates. However, the Wasatch front is still a more reasonable market than other large surrounding urban areas like Northern or Southern California, Las Vegas, Seattle or even Denver. Housing prices in Utah will continue to increase at rates well above the national average due to relatively high rates of population and economic growth. As long as the state is considered a bargain for some other competitive markets, we will probably see home prices continuing to grow and affordability continuing to be an issue.
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Featured in Yahoo Homes Article, “The $100 down payment mortgage exists – but should you bite?”

Don't let a big down payment keep you from buying a home. Here are four mortgage options that require as little as zero to $100 down.

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"These programs typically come with a higher interest rate, but for the right borrower [they] are a great alternative to renting," says Anthony Van Dyke, president of ALV Mortgage in Salt Lake City, Utah.

Why the rate hike? According to Van Dyke, the rate is higher, because the potential risk for lenders is higher when borrowers put less of their own money down in a house purchase.

  ...  

Option #2: FHA Down Payment Assistance Programs

Buying a home with 20 percent down may not seem realistic. But what if you could knock that number way down?

Well, with a Federal Housing Administration (FHA) loan, your down payment can be as little as 3.5 percent of the purchase price of a house, according to the U.S. Department of Housing and Urban Development (HUD) website.

If that's still out of your budget, then you may be able to go even lower with an FHA down payment assistance program. How exactly is that possible?

"FHA allows government entities and non-profit organizations to issue second mortgages to cover the required 3.5 percent down payment," says Van Dyke. How? Well, these programs offer qualified applicants loans or grants for their down payment - the latter being an even better option since that's money that doesn't need to be paid back.

This essentially means that you could secure a mortgage with zero down through a down payment assistance program - a boon for cash-strapped homebuyers.

  Read the entire Article Here: https://homes.yahoo.com/news/4-ways-to-pay-down-your-mortgage-172117215.html
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