Utah’s real estate market is strong, which means opportunities abound for savvy homeowners, investors—and even first-time homebuyers, thanks to high demand for real estate and interest rates currently sitting at near-record lows. Here are six ways you may be able to benefit from the soaring Utah real estate market.
Buying a Second Home
Buying a second home may be a sound strategy for a number of reasons—maybe the kids have moved out, and you’re looking to downsize to something a little lower maintenance and keep your current home as a rental property, or maybe you want a vacation home to enjoy Utah’s varied climates at different times of the year. By working with a community bank, not only will you get sound advice on the local market and economy when buying a second home, you’ll often end up with a lower interest rate than you’d be able to get from a big national lender.
Home Equity Lines of Credit
You may be surprised to learn that a home equity line of credit (or HELOC) can be used for anything from home improvements to debt consolidation to a college fund for your children. You can even use it as a down payment on a second home or an investment property. By taking out a loan against the equity in your home, you’ll have a line of credit you can use and pay down multiple times over the term of the loan. Think of it like self-banking with incredibly low interest rates.* Additionally, when working with a community bank to secure a home equity line of credit, you’ll often find lower rates and greater flexibility than you’ll get from one of the big-box banks.
Refinancing Your Home
With interest rates at or near all-time lows, the time may never be better to refinance your home. Refinancing your home gives you several options and benefits. For example, you could lower your interest and save thousands of dollars over the life of your loan. You could shorten the term of your loan and pay your home off sooner. First-time homeowners who have built up some equity since moving in may also want to switch from an FHA loan to a conventional loan to save on expensive mortgage insurance. Many people often use a refinance to consolidate other high-interest-rate debt and improve their monthly cash flow. While refinancing can be an arduous process when working with a national bank, developing a relationship with a community bank closer to home that understands the borrower’s full financial situation can give borrowers much more flexibility during the process—especially self-employed borrowers with less-traditional income streams.
For seasoned consumers, age 62 and older, reverse mortgages may be a fantastic option to help navigate the Golden Years. Reverse mortgages, also known as Home Equity Conversion Mortgages (HECMs), were designed to help seniors stay in their homes and age in place. Many of the benefits that seniors realize through reverse mortgages include easing their monthly budget, having peace of mind that they can stay in their homes, having options to access money when needed, and being able to travel and enjoy life. When used proactively, it can be a major part of an effective retirement plan. In 2017, over 7.3 million home mortgages were closed in the United States, and of those, less than 8% of them were reverse mortgages. Being such a specialized product, it is very important to work with an experienced banking provider who can advise you and help you match the correct mortgage product to your individual needs.
For many people, investing in real estate can be one of the most effective and realistic ways to build wealth. In some cases, the supplementary income from rental properties can even surpass the amount of income earned at the owner’s day job. There are many options to choose from, whether that is overnight rentals like AirBNB or VRBO, fix and flip homes popularized by home-improvement shows, or more traditional investment properties with long-term tenants. Choosing the right investment properties can make the difference between a flourishing income stream and an endless drain on your time, resources, and sanity. By working with a bank that knows the local community and local rental market, you may be able to better predict how any given investment property may affect your cash flow, and receive valuable advice on how, where, and when to commit to owning one or more dedicated rental properties.
Utahns looking to buy their first home may be wary of committing to a mortgage because of today’s high real estate prices. But with the population projected to double in the next 20 years, the continually rising cost of renting may put the numbers in favor of owning your own home, despite the rising costs of real estate in Utah. When you consider equity, tax deductions, and other factors, buying your own home can make the difference between starting to build wealth and staying stuck in the rat race. For people with a limited or less-than-stellar credit history, FHA loans are often much more accessible than conventional home loans—and the down payment required is often much less than that of a conventional loan. And since FHA loans are government-backed, interest rates are incredibly low and guidelines are somewhat flexible. An experienced lender will help demystify the home-buying process and work with you to determine how much home you can afford without putting a strain on your finances.
These are just a handful of ways it’s possible for Utahns to take advantage of incredibly low interest rates and a real estate market that continues to climb. If you’re ready to experience firsthand the difference a personal relationship with a community bank can make, contact Altabank today. Member FDIC.
* HELOC interest rates are often variable.