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Compare mortgage rates in Utah.
Key Points
• Mortgage rates in Utah are influenced by economic factors and borrower’s financial status.
• Higher interest rates can make homeownership less affordable, especially for middle-income families.
• Homeowners might consider refinancing their mortgages when rates drop.
• Homeowners might consider refinancing their mortgages when rates drop.
• Understanding historical mortgage trends can provide insights into future rate movements, offering peace of mind.
• Utah offers various mortgage options, including fixed-rate, adjustable-rate, FHA, VA, USDA, and jumbo loans.
Introduction to Mortgage Interest Rates
In spring 2024, SoFi asked 500 would-be homebuyers what were the most important factors in choosing a mortgage lender. Almost two-thirds (64%) of respondents said interest rates were a key consideration.
Mortgage interest rates are the fees charged by lenders for borrowing money to purchase a property. These rates are determined by a complex interplay of economic factors and the borrower’s financial profile. Understanding how mortgage rates are calculated and the factors that affect them is a smart move for homebuyers seeking the best possible deal.
Where Mortgage Rates Come From
The Federal Reserve, also known as the Fed, sets short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates. While home loans are not directly tied to Fed rates, they tend to follow similar economic trends.
When the Fed’s interest rate is high, mortgage rates are likely to be higher as well. This relationship underscores the interconnectedness of the financial system and the impact of monetary policy on various borrowing costs.
As the Fed adjusts its interest rate policy, mortgage rates tend to respond accordingly, reflecting the overall cost of borrowing money in the economy.
How Interest Rates Affect Home Affordability
Mortgage rates have a profound impact on home affordability. Even small changes in interest rates can substantially affect monthly mortgage payments and the overall cost of homeownership.
For instance, a seemingly small difference of 1.00% can translate into tens of thousands of dollars in additional interest paid over the life of a mortgage. Indeed, rising interest rates can price middle-income families out of the housing market. This underscores the importance of securing the best possible mortgage rate to ensure affordability and long-term financial stability.
Should Homebuyers Wait for Interest Rates to Drop?
If you’re buying your first home, you may be facing the dilemma of whether to purchase a home immediately or wait for interest rates to drop. Experts caution against attempting to time the market and urge homebuyers to keep these considerations in mind:
Waiting for interest rates to drop may seem like a prudent strategy, rates can be unpredictable and may not always move in the desired direction. Additionally, home prices may also appreciate during this waiting period, potentially offsetting any savings from lower interest rates.
Homeowners who purchase a property at a higher interest rate can always take advantage of a mortgage refinance in the future when rates drop. Refinancing allows them to secure a lower interest rate and reduce their monthly payments, making it a viable option for those who can afford to wait.
Utah Mortgage Rate Trends
Understanding historical mortgage rate trends in Utah can provide valuable insight into potential future movements. By analyzing past rate fluctuations, homebuyers can make informed decisions about when to enter the housing market.
Utah’s mortgage rates have experienced fluctuations over the years, influenced by both national economic conditions and local market dynamics. While rates have risen in recent years, they remain below historical highs and are currently hovering around the 50-year average. (The FHFA stopped reporting on state interest rates after 2018.)
This historical perspective offers some reassurance to homebuyers, indicating that current rates are within the normal range and not exceptionally high by historical standards.
| Year | Utah Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.27 | 8.14 |
| 2001 | 6.77 | 7.03 |
| 2002 | 6.29 | 6.62 |
| 2003 | 5.44 | 5.83 |
| 2004 | 5.59 | 5.95 |
| 2005 | 5.78 | 6.00 |
| 2006 | 6.60 | 6.60 |
| 2007 | 6.51 | 6.44 |
| 2008 | 6.01 | 6.09 |
| 2009 | 4.99 | 5.06 |
| 2010 | 4.82 | 4.84 |
| 2011 | 4.55 | 4.66 |
| 2012 | 3.59 | 3.74 |
| 2013 | 3.81 | 3.92 |
| 2014 | 4.11 | 4.24 |
| 2015 | 3.89 | 3.91 |
| 2016 | 3.65 | 3.72 |
| 2017 | 3.97 | 4.03 |
| 2018 | 4.55 | 4.57 |
Historical U.S. Mortgage Rates
For a broader context, it may be helpful to consider historical U.S. mortgage rates. By comparing Utah’s rates to national trends, homebuyers can gain a deeper understanding of the market’s overall trajectory.
Factors Affecting Mortgage Rates in Utah
Numerous factors influence mortgage rates in Utah and across the nation. Understanding these factors empowers homebuyers to make informed decisions and anticipate potential rate movements.
Economic indicators, such as the federal funds rate, inflation, and unemployment, play a significant role in shaping mortgage rates. Additionally, borrower-specific factors, including credit score, down payment, income, assets, and loan type, also impact the rates offered by lenders.
While economic factors are largely external and beyond the control of individual homebuyers, there are certain aspects within their control that can influence their mortgage rates. By improving their credit score, increasing their down payment, and maintaining a steady income, homebuyers can position themselves to secure more favorable mortgage rates.
Economic Factors
Economic factors exert a substantial influence on mortgage rates, both in Utah and nationwide. Understanding these economic indicators can help homebuyers anticipate rate movements and make informed decisions.
• The Fed: The Federal Reserve’s decisions regarding the federal funds rate have a ripple effect on the entire financial system, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates. Conversely, a decrease in the federal funds rate can result in lower mortgage rates.
• Inflation: Inflation, characterized by a general increase in prices and a decrease in the purchasing power of money, can impact mortgage rates. As inflation rises, lenders may increase interest rates to protect their investments and compensate for the eroding value of money.
• Unemployment: A low unemployment rate, indicative of a robust economy, can lead to higher mortgage rates. This is because increased economic activity and job growth stimulate demand for housing, driving up home prices and, consequently, mortgage rates.
Consumer Factors
In addition to economic factors, several consumer-specific factors play a role in determining mortgage rates. By understanding these factors, homebuyers can take steps to improve their financial profile and secure more favorable rates.
• Credit score: In SoFi’s recent survey, more than one in 10 homebuyers (11%) said an insufficient credit score was one of the challenges they were facing. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. As a result, individuals with higher credit scores typically qualify for lower mortgage interest rates.
• Down payment: A larger down payment reduces the loan amount required, making the borrower less risky in the eyes of the lender. Consequently, borrowers who can afford a larger down payment may be rewarded with a lower mortgage interest rate. A third of respondents (30%) to SoFi’s survey said they were planning to put down between 11% and 20%. One in five (19%) said they would put down 6% to 10%. Ten percent of buyers were aiming for a 5% down payment or less, and 7% of homebuyers were exploring no-down-payment options.
• Income and assets:A steady income and substantial assets demonstrate a borrower’s financial stability and ability to repay the mortgage. Lenders view such borrowers as lower-risk and are more likely to offer them lower mortgage interest rates.
• Type of mortgage loan: Different types of mortgage loans come with varying interest rates. Adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate, making them attractive to borrowers who plan to sell or refinance before the fixed-rate period ends. Government-backed loans, such as VA mortgages, may also offer lower rates. Additionally, shorter loan terms (10 or 15 years) typically come with lower rates than longer terms (30 years).
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Types of Mortgages Available in Utah
Utah offers a diverse range of mortgage options to cater to the needs of different homebuyers. Understanding these mortgage types and their characteristics can help you choose the right one for your situation.
Conventional loans, which are not backed by government agencies, offer flexibility in terms of interest rates and loan amounts. They can be fixed-rate or adjustable-rate. Conventional loans have a maximum loan amount of $766,550 in most of Utah. However, the limit is $997,050 in Wayne County, and $1,149,825 in Summit and Wasatch counties.
Fixed-Rate Mortgages
Fixed-rate mortgages provide peace of mind with a consistent interest rate for the entire loan term. This stability allows homebuyers to budget effectively and avoid the uncertainty associated with fluctuating rates.
Fixed-rate mortgages come with varying loan terms, typically ranging from 10 to 30 years. The choice of loan term depends on the borrower’s financial situation and preferences. Shorter loan terms result in higher monthly payments but allow for faster payoff of the loan, while longer loan terms offer lower monthly payments but extend the repayment period.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) provide an initial period of lower interest rates, followed by periodic adjustments based on market conditions. While ARMs can offer savings initially, they also carry the risk of higher payments in the future. Still, ARMs can be advantageous for borrowers who plan to sell or refinance their property before the initial fixed-rate period ends.
FHA Loan
FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with limited financial resources or less-than-perfect credit.
The FHA insures FHA loans, reducing the risk for lenders and allowing them to offer more favorable terms to borrowers. This insurance enables borrowers with lower credit scores or smaller down payments to obtain financing for their home purchases.
One drawback: FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, as well as monthly MIP for new homebuyers of 0.15% to .75% — most often 0.55%.
VA Loans
VA loans, provided by the Department of Veterans Affairs, offer exclusive benefits to eligible veterans, active-duty military members, and certain surviving spouses.
VA loans are specifically tailored to meet the needs of those who have served or are currently serving in the military. These loans provide unique advantages, such as no down payment requirement and competitive interest rates.
Borrowers obtain these loans from private lenders after first obtaining a certificate of eligibility from the VA.
USDA Loans
USDA loans, backed by the U.S. Department of Agriculture, are designed to assist low-income borrowers in purchasing homes in rural areas. These loans offer competitive interest rates and flexible credit requirements, making homeownership attainable for those who may not qualify for conventional financing.
The USDA’s backing of these loans ensures reduced risk for lenders and allows them to provide favorable terms to eligible borrowers.
Jumbo Loans
Jumbo loans are designed for borrowers who need to exceed the conventional loan limits (noted above) set by the Federal Housing Finance Agency (FHFA). These loans cater to individuals seeking higher loan amounts for more expensive properties.
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Popular Places to Get a Mortgage in Utah
Securing a mortgage often depends on choosing the right location, where home prices and the cost of living are affordable. Utah offers various cities and towns that cater to different homebuyers’ needs and budgets.
Job opportunities, housing inventory, and local amenities also factor into the attractiveness of a location for homebuyers. With a little due diligence, individuals can make informed decisions about where to purchase a property and secure a suitable mortgage.
The cost of living varies significantly across locations in Utah. Some cities, such as Park City and St. George, have higher costs of living compared to the state average, while others, like Cedar City and Price, offer more affordable living expenses. Understanding the cost of living in different areas can help homebuyers determine their budget and choose a location that aligns with their financial capabilities.
Least Expensive Locations
For homebuyers seeking affordability, several cities in Utah offer lower costs of living compared to the state average and the cost of living in the U.S. These locations provide opportunities for individuals to secure a mortgage and purchase a home without straining their budget.
The Cost of Living Index (COLI) ranks states and cities against the national average, with values above 100 being more expensive, and values below 100 more affordable.
• Kaysville average home value $635,484; COLI 114.6
• Spanish Fork $495,479 ; COLI 117.2
• South Ogden $415,374 ; COLI 107.2
• Orem $483,127 ; COLI 117.2
• Nibley $477,884 ; COLI 102.2
Most Expensive Locations
On the other end of the spectrum, certain cities in Utah are known for their sky-high housing costs. While these locations may offer desirable amenities and job opportunities, they require a higher income and a larger budget to secure a mortgage and purchase a property in line with average home values:
• Alpine $1,049,415
• Park City $1,559,039
• Alta $1,589,280
• Granite $1,092,374
• Hideout $1,567,227
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Tips for Securing a Competitive Mortgage Rate in Utah
Obtaining a competitive mortgage rate allows homebuyers to save money over the life of a loan. By following these tips, homebuyers in Utah can increase their chances of securing the best possible interest rate.
Compare Interest Rates and Fees
Homebuyers should diligently compare interest rates and fees from multiple lenders to ensure they are getting the best deal. It’s important to consider not only the headline interest rate but also any associated fees, such as origination fees, appraisal fees, and discount points.
By comparing multiple offers, homebuyers can identify the lender that provides the most favorable combination of interest rate and fees. This comprehensive comparison empowers them to make an informed decision that aligns with their financial goals.
Get Preapproved
Getting preapproved for a mortgage strengthens a homebuyer’s position in the real estate market and allows them to move quickly when they find the right property.
Preapproval involves submitting financial information to a lender, who then evaluates the borrower’s creditworthiness and determines the maximum loan amount they are eligible for. This process provides homebuyers with a clear understanding of their borrowing power. The mortgage preapproval process can take up to 10 days, but will likely pay off down the road.
Utah Mortgage Resources
Utah offers several programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. These resources provide valuable support and guidance throughout the homebuying process.
First-Time Homebuyer Programs
First-time homebuyers in Utah can benefit from several programs designed to make homeownership more accessible. The Utah Housing Corporation (UHC) FirstHome program offers first-timers with a credit score of 660 and higher the lowest available interest rate on a first mortgage; income and purchase limits apply. UHC also offers a grant of $2,500 to first-time homebuyers in Utah who are veterans.
Down Payment Assistance
Down payment assistance programs in Utah provide financial support to help homebuyers overcome the hurdle of saving for a down payment. UHC offers a second mortgage for down payment assistance, as part of its FirstHome program. See link above for details and eligibility.
Tools & Calculators
SoFi online tools and calculators are available to help homebuyers estimate their monthly mortgage payments, compare interest rates, and calculate affordability. These tools empower homebuyers to make informed decisions and plan their finances effectively.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Utah
Homeowners in Utah have the opportunity to refinance their existing mortgages to secure lower interest rates, reduce monthly payments, or access cash for other financial needs.
The FHA Streamline Refinance program offers a simplified and cost-effective way for FHA-insured homeowners to refinance their mortgages. It allows borrowers to obtain lower interest rates without the need for a new appraisal or extensive documentation.
VA Interest-Rate Reduction Refinance Loans (IRRRL) provide an opportunity for VA loan holders to lower their interest rates and reduce their monthly mortgage payments. This program allows eligible veterans and active-duty military members to refinance their VA loans without the need for a new appraisal or full credit check.
Closing Costs, Taxes, and Fees in Utah
Homebuyers in Utah can expect to pay various closing costs, taxes, and fees associated with purchasing a property. Closing costs in Utah typically range between 2% and 5% of the purchase price of the home. These costs include title insurance, appraisal fees, recording fees, and lender fees. It’s important for homebuyers to factor these costs into their budget when planning for a home purchase.
The specific closing costs associated with a property can vary depending on its value and location. Higher-priced properties and those located in certain areas may incur higher closing costs. Homebuyers should carefully review the closing disclosure provided by the lender to understand all associated costs and ensure they have sufficient funds to cover them.
The Takeaway
Utah offers a range of options for homebuyers, catering to diverse financial situations and preferences. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in the Beehive State.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
Will mortgage rates drop in Utah?
Predicting future mortgage rate movements is challenging due to the influence of various economic factors. However, homebuyers can monitor market trends, stay informed about economic indicators, and consult with local mortgage professionals to make informed decisions about when to purchase a home or refinance their mortgage.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates can be subjective and influenced by historical trends and individual expectations. Mortgage rates fluctuate over time based on economic conditions, and what is considered normal can vary. It’s important for homebuyers to understand current market conditions and make decisions based on their financial situation and long-term goals.
Will Utah home prices ever drop?
Utah’s housing market is influenced by various factors, including economic conditions, population growth, and supply and demand dynamics. Predicting future home price movements is challenging, and past performance does not guarantee future results. Homebuyers should carefully evaluate their financial situation, consider market trends, and consult with real estate professionals to make informed decisions about purchasing a property.
Is it a good time to buy a house in Utah?
The decision of whether it’s a good time to buy a house in Utah depends on individual circumstances, financial readiness, and market conditions. Homebuyers should consider factors such as mortgage rates, home prices, their financial stability, and long-term plans. Consulting with real estate professionals and financial advisors can provide valuable insights and help individuals make informed decisions about purchasing a property.
How to lock in a mortgage rate?
To lock in a mortgage rate, homebuyers can work with a lender to secure a specific interest rate for a period ranging from 30 to 90 days. This process involves paying a fee to the lender, known as a rate lock fee. By locking in a rate, homebuyers protect themselves from potential interest rate increases during the lock-in period.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including the federal funds rate set by the Federal Reserve, inflation, unemployment rates, and borrower-specific factors such as credit score, down payment, and loan type. Lenders use these factors to assess the risk associated with a loan and set the interest rate accordingly. Homebuyers can improve their chances of securing a lower interest rate by maintaining a good credit score, increasing their down payment, and choosing a shorter loan term.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process