How much of a down payment do I need?
By far the most common question I receive from borrowers. In Utah we have several answers to that question. You have No Down Payment options such as Utah Housing loans, USDA rural development loans and of course for our military personnel you have the VA loans, all of which require no down payment. Credit score requirement are a little different for each loan and there are some income limitations but for the most part with a 640-660 fico score you will be able to qualify for one of the no down payment options.
Then you have your FHA and Conventional (Fannie Mae & Freddie Mac) loan options as well. FHA currently is requiring 3.5% minimum down payment while conventional lenders are requiring a minimum of 5% down payment here in Utah and across the country. Mortgage insurance is the biggest difference with conventional and FHA loans. FHA at the time of this post is requiring a 1% upfront mortgage insurance premium and a 1.15% annual mortgage insurance premium billed monthly. Conventional mortgage insurance differs for every fico score range and loan to value but with a 720+ fico and 5% down payment a typical mortgage insurance premium is .67% annually which is billed monthly. FUN STUFF huh.
Now that the government has come together and agreed (hopefully) upon a resolution to the debt ceiling issue we have been facing this last month, it looks like we can all get back to focusing on the economy once again and getting this housing market back on track. Home prices in Utah have been stabilizing, in fact in a recent conversation I had with Kevon Inouye a local appraiser here in Orem, Utah he said depending on the city he is seeing stable home values and sometimes he is seeing increased values making it hard for him to support or justify a home purchase price. That was music to my ears when he made that comment about our market. We can all hope that will continue as we wade through the majority of the foreclosures and short sales.
Adam Weston of Rese Realty in Pleasant Grove, UT was telling me last week that it seems like every well priced home either bank owned, short sale or market sale has multiple offers on it within the first 2 weeks. He expressed the frustration of once again trying to educate buyers on the fact that if they don't put forth their best offer first they will probably miss out on the home. Buyers are now used to hearing story's about how their brother in law was able to haggle with the sellers or bank for weeks (being the only offer on the table), they were able to have the take it or leave it mentality with the sellers knowing that they were in the drivers seat. "It is going to be a whole reeducating process all over again with buyers teaching them that the pendulum is swinging back to the sellers side with more offers coming in the buyers no longer hold all of the cards." Says Weston
If there is 1 thing that I have learned in this business it is that the Real Estate Market in Utah is always changing. There is always going to be something new to educate borrowers and buyers on whether you are a real estate agent or mortgage loan officer, there is always a new rule, regulation, economic factor or market swing to take into account. If you are standing still in this business then you are getting left behind!!
Cheers to keeping you informed and in the drivers seat.
Stetson Lowe - Utah's Mortgage Expert - 801-318-4996
