Utah Home Buyers Still Have Opportunities to Purchase

By Josh Mettle

NMLS Licensed Mortgage Lender

Salt Lake City - With the disappearance of 100 percent financing, 80/20 mortgage programs and down payment assistance like Nehemiah and Neighborhood Gold, many would-be home buyers have mistakenly given up on the American dream of home ownership.

However, several zero down financing programs and options are still available to the general public. Most banks and mortgage brokers aren’t promoting these programs because they are not incentivized to sell them or their institutions don’t offer them at all.

While it is true FHA and Conventional loans through Fannie Mae and Freddie Mac all require down payments of 3.5 to 5.0 percent or more, there are still several programs that can turn a qualified renter into a happy home owner. Here’s the last of no money down programs:

Rural or USDA require zero down payment and have no monthly mortgage insurance premiums. Interest rates are comparable to FHA, currently in the 5 percent range for a 30 year fixed. Many people are shocked to hear these programs are available in areas like Eagle Mountain and Tooele. The USDA boundaries are set every 10 years and scheduled to reset after the 2010 Census Report. Many areas that were “Rural” in 2000 are now mature neighborhoods but still qualify for the USDA zero down financing due to the dated USDA boundaries.

Utah Housing is a local program that continues to offer zero down payments and will even cover your closing costs by financing up to 103 percent of the purchase price. This program has a significant list of restrictions but can be utilized state wide and offers 30 year fixed first mortgages at 4.75 percent as of the date of this article.

Own in Sandy Program is a city grant program that can be used toward the FHA down payment requirement. These programs drastically reduce or eliminate the cash required for a down payment amount.

FHA home loans now require a 3.5 percent down payment but the funds can come from any of a variety of sources such as a gift from family members, employers, non-profit organizations, secured loans from a bank, 401k loans, sweat or trade equity and rent credits. Many home buyers assume if they don’t have the money in the bank they can’t qualify. This is probably the biggest mistake uneducated loan officers and Realtors make when discussing financing options with clients.

All of these programs are in addition to the federal government’s $8,000 tax credit for first-time home buyers or $6,500 credit for qualifying previous and existing owners. This is not a tax deduction it’s a tax credit, which equals cold hard cash in your pocket or it’s subtracted off the taxes you owe. Couple this with 30-year fixed interest rates around 5 percent and a buyer’s real estate market unlike anything Utah has seen for decades and you have the perfect storm for potential home buyers.

Unfortunately, so many Utahns have been scared by the national media telling them the sky is falling. The fact is, this type of buyers market only comes around every 10 years or so as the natural cycles of real estate ebb and flow. It can be hard, but you really must see through the doom and gloom reported by the media to realize this is an opportunity of a lifetime.

It was Warren Buffett, arguably the worlds best investor and currently the richest man alive, who said, “Be fearful when others are greedy and greedy when others are fearful.” Buffett has made $62 billion dollars living by this very simple rule.

Josh Mettle is a professional mortgage lender in Salt Lake City. Josh is also a fourth generation real estate investor, and owns a number of rental homes, apartment units and mortgages. If you’re ready to buy or sell residential real estate, get Josh’s latest free tips, tools and newsletter at www.joshmettle.com. Utah real estate professionals can keep informed by visiting Josh's Mortgage and real estate blog at www.joshisblogging.com.