When it comes to homeownership, building your new home may be the best option. This is considering that you can go for a custom floor plan, and include different fixtures to your likely. While homeownership remains the American dream we all want to achieve, financing can be a huge setback. Luckily, mortgage lenders are there to facilitate the dream, enabling Americans to achieve the dream of owning a home someday.
In this post, we share important tips for applying for a mortgage for building a home in Utah. Thus, if the thought of building a new home has hit you but you have no idea how to go about securing a mortgage for building a home, keep reading.
- Check your Credit Score
The moment you present yourself to the best mortgage lenders in Utah with the intention of borrowing money, the credit score will be the first thing the lenders check. Thus, with the thought of homeownership still fresh on your mind, it is time you review to check your credit score.
To borrow a mortgage for building a home, you should meet the minimum credit score is set by the mortgage lenders. Thus, if your credit score is too low, start working on methods to improve or raise your credit score. Having said that, you are likely to ask what approaches work best when it comes to building / repairing a credit score. Let us look at the different things you need to bear in mind when it comes to building or repairing your credit score:
- Start by reviewing your credit report
- If there are erroneous entries, ensure you file a dispute
- Make sure you pay bills on time
- Get credit for making utility and cell phone payments early
- Ensure credit card balances remain low
- Open new credit accounts when there is the need to do so
- Do not close unused credit cards
Note that the amount of time it takes to repair credit depends on the underlying reasons why your credit score is poor. Thus, it is important you begin working on credit score earliest possible to avoid disappointments when you are ready to start applying for a mortgage.
- Start Saving For Down Payment
Another important factor that best mortgage lenders in Utah will look at when you are applying for a mortgage is the ability to raise the 20% down payment. Thus, it is important that you begin setting aside some cash that you can use to pay for the mortgage down payment.
Fortunately, you still can borrow mortgage loans with a low down payment. A good example is the FHA home loan, which requires a down payment of as low as 3.5%. Note that the more down payments you pay, the better. For instance, with the FHA home loan, paying a down payment above 10% qualifies for a loan even if the credit score is less than 580, but higher than 500.
- Apply for Mortgage Preapproval
A mortgage preapproval letter is an important step when applying for a mortgage. The letter gives an indication of the mortgage amount you qualify to borrow. Further, the mortgage preapproval letter indicates the interest rates and the costs associated with the mortgage.
- Search For the Best Mortgage Lenders Utah
You may ask who qualifies to be the best mortgage lender. Ideally, mortgage lenders charge different rates to the borrowers. Further, the mortgage lenders will impose their requirements to the mortgage borrower. Simply, the best mortgage lenders Utah will charge a fair interest rate, and provide most lenient requirements. To that end, it is important you do your homework in order to find the best mortgage lenders in Utah. This means that you will need to visit a couple of mortgage lenders in Utah, applying for mortgage approval. Compare the interest rates and the mortgage terms to select the best lender.
- Understand Different Mortgage Options
When applying for home building mortgage, it is necessary that you make sure you understand the different mortgage options. We have the Government-sponsored mortgages and conventional home mortgages. The Government-sponsored mortgage options include:
- FHA Home Loan: Sponsored by the Government through the Federal Housing Administration.
- USDA Home Loan: Issued by the US Department of Agriculture
- VA Home Loan: Issued by the Department of Veteran Affairs
The government-sponsored home mortgages feature different requirements. The inspiration for these mortgage options is to ensure affordable housing for all Americans. The conventional home loans issue a stricter requirement. This is in the form of a credit score and the down payment requirements. Thus, before applying for the home building mortgage, it is important that you compare the different loan products available in the market.
We have covered the important basics when you want to apply for the home building mortgage in Utah. Be sure to engage a qualified home mortgage broker, who will guide you through the different steps of applying for a mortgage for building a home.