How to Buy a House in Utah: A Homebuyer’s Guide

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Edited byScott Strandberg
Edited byScott Strandberg

Updated: March 3, 2023

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The value of a typical home in Utah has climbed by roughly 10% in the last year to $557K — this is far more expensive than the value of a typical home nationwide, which is $358K.

There are additional factors to consider, such as the mortgage terms, in addition to pricing and locating the best place to buy a house in Utah. Utah is one of the most expensive states for homeownership in the nation while having relatively low property tax rates. Mortgage payments in Utah are roughly $102 per month more expensive than they are nationwide.

Understanding the process of buying a property can have wide-reaching benefits. MoneyGeek's guide for Utah homeowners puts a focus on the fundamentals, such as submitting an application, figuring out mortgage rates, conducting a home inspection and closing a deal.

Key Takeaways

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In the past year, the average home in Utah has increased in value, reaching $557K.

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A Utah homebuyer must meet the income requirements, minimum credit score and debt-to-income ratio to be approved for a mortgage. Down payments are also usually required.

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Finding the appropriate location, figuring out mortgage rates and finalizing your loan are some crucial aspects of purchasing a home in Utah.

Choose an Ideal Location

One of the key considerations for consumers when purchasing a home is the location. The cost of your property and mortgage will be significantly influenced by where you decide to live.

You should consider the cost of living, neighborhood culture, accessibility to amenities and other readily accessible spaces when browsing the cheapest places to buy a house in Utah.

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Seeking assistance from a real estate agent to streamline the process is a smart move, especially since the housing market can be intimidating at first. MoneyGeek believes that an excellent real estate agent is:

  • Reliable in the real estate field
  • Familiar with the housing market
  • Able to express concepts clearly
  • Reputable and trustworthy

However, the ideal real estate agent for you will depend greatly on the aspects that are important to you when buying a home. If you're unclear about where to begin your search for the best place to buy a house in Utah, you can also ask your family and friends for suggestions.

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Depending on the city or county you live in, Utah's cost of living might differ considerably. Some of the costs that should be considered are:

  • Utility bills
  • Car insurance
  • Income, property and real estate taxes
  • Food and groceries
  • Child care and pet care
  • Health insurance costs
  • Phone bills and internet service

Use MoneyGeek's cost of living calculator to estimate your monthly expenses and determine how much it may cost a typical family to choose the best place to buy a house in Utah.

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Although living in Utah is expensive, there are still advantages to doing so. If the price of homes is intimidating, take a look at suburbs and rural areas. You can choose one of Utah’s cheapest communities for homebuying, like the small towns of Moroni, Sterling or Mayfield.

Although you might purchase a home for a lot less money in these areas, keep in mind that you may only have limited access to public resources like hospitals, schools, restaurants and malls.

Calculate Mortgage Rates

Once you’ve found the best place to buy a house in Utah, MoneyGeek advises paying attention to a number of factors that significantly affect your mortgage rate, including your chosen lender, credit score, interest rates, loan type and loan amount, among others.

There are several different types of mortgages available in Utah, and they all have varying rates and eligibility requirements.

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Individuals searching for the cheapest places to buy a house in Utah have a variety of mortgage options. Note that there are differences between the various loan types in terms of eligibility, rates, conditions and lending restrictions.

Consider your credit score, income, debt-to-income ratio and other factors. Your profile is a significant determinant of the rates you’ll get, as people with excellent credit typically get low interest rates. Following that, you must follow the guidelines set forth by the lender you selected.

The average interest rates for each type of loan are provided below by MoneyGeek:

Before completing an application, it is a good idea to make sure you are eligible since some loans are only offered to specific applicants. For example, only active and retired military personnel and their surviving spouses are eligible for VA loans.

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By estimating your mortgage, you can calculate how much it will cost you to choose the best place to buy a house in Utah.

To determine which financing option is best for you, use the FHA vs. conventional loan calculator. If you're unsure, MoneyGeek has a handful of suggestions that can assist you in determining the type of loan you need.

Finding a mortgage lender is the next step after determining the rates. You should evaluate your loan options and compare offers to find the best one for your needs.

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Being aware of your financial condition might assist you in streamlining the process of buying a house in Utah. Remember that each lender has unique requirements, criteria and limitations. Mortgage lenders typically consider the following when evaluating your application:

  • Income: Your ability to repay the mortgage will be analyzed based on your salary.
  • Creditworthiness: The higher your credit score, the lower rates you’ll likely receive for your mortgage.
  • Debt-to-income (DTI) ratio: Your DTI ratio reveals how much of your income is utilized to settle existing obligations.
  • Down payment: You can get lower rates while avoiding private mortgage insurance if you put down at least 20% on a conventional loan.

Make sure all of these factors work in your favor by improving them before seeking mortgage approval.

Prepare Down Payment Requirements

Most of the time, a down payment is required for you to buy your ideal house from Utah's real estate market. Your APR depends on the type of loan and the size of your down payment. Some loans require as little as 3.5% down, while others require no down payment at all.

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The mortgage loan you choose may affect the amount of your down payment. Usually, a 20% down payment is needed to avoid private mortgage insurance (PMI) for a conventional loan. Meanwhile, FHA loans require just a 3.5% down payment. USDA and VA loans don't require any down payments, although they have extremely strict eligibility requirements. For instance, you can only get a USDA loan if you’re a low-income borrower buying a home in a qualifying small town or rural area.

Once you are aware of the loans you are eligible for, you may calculate your down payment. Your down payment has a big impact on how much you spend each month because bigger down payments typically mean lower monthly payments.

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Homebuyers in Utah should also be aware of mortgage insurance, a mechanism that safeguards lenders against borrowers who default on their loans. You may be required to pay monthly private mortgage insurance (PMI) for conventional loans if you put down less than 20%. Once you’ve paid off 20% of the mortgage, you can ask for the PMI to be removed.

Take a look at the mortgage insurance requirements for several popular loan types.

  • Conventional loans: You need to purchase PMI if your down payment is less than 20%.
  • FHA loans: No PMI required, but you need to pay an upfront mortgage insurance premium (MIP).
  • USDA loans: No PMI required, but a guarantee fee — paid to the USDA by your lender — will be included in your monthly loan payment.
  • VA loans: No PMI required.
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Some consumers might not be able to afford a 20% down payment. Thankfully, Utah offers a number of programs to assist with down payments:

  • Utah Housing Down Payment Assistance: Homeowners can combine a second mortgage from Utah Housing for down payment assistance with one of the first mortgage programs offered by the organization.
  • Salt Lake City Down Payment Assistance: The Community Development Corporation of Utah offers forgiven, deferred loans to homebuyers in the Salt Lake City area who meet certain requirements.
  • Chenoa Fund Down Payment Assistance: The down payment loan is a second mortgage that can be linked with an FHA or conventional loan to provide assistance of up to 5%. An interest rate as low as 0% may be applied to the second mortgage, which may have a period of 10 or 30 years.

You might look at other options for homebuying assistance if these programs don't fit your requirements. If you're trying to figure out how to buy a house in Utah, there are additional programs that assist first-time buyers.

Get Pre-Approved for a Mortgage

Obtaining a mortgage pre-approval is crucial after selecting a lender in Utah. Once you have pre-approval, sellers will take you much more seriously as a prospective homebuyer.

Prequalification is not the same as pre-approval. Your lender only offers a projected amount of the loan when you prequalify. On the other hand, pre-approval indicates that the lender has agreed to loan you a specified amount after examining your credit report and financial history.

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The following documentation and data are often required in order to apply for a mortgage in Utah:

  • Tax returns
  • Pay stubs, W-2s or other proof of income
  • Bank statements and other assets
  • Credit history
  • Gift letters
  • Photo ID
  • Social Security number

Find out what your lender requires so you can promptly compile the necessary documentation. Some buyers will be required to submit additional documents. For example, self-employed individuals frequently need to include more detailed financial records.

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Knowing when to ask for approval can be valuable, as it can take up to 10 days, depending on your lender. By obtaining the necessary paperwork, you can hasten the mortgage approval process.

The pre-approval letter from your lender will normally last for up to 90 days, although some lenders have shorter windows. It’s best to wait to get pre-approved until you’re ready to bid on homes. When your pre-approval expires, you can renew it, but this can require additional hard credit checks.

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You can find out how much money you can borrow from a lender by getting a pre-approval letter. It also shows that you are a committed buyer with the resources to obtain a mortgage.

The number of pre-approval letters you can seek is not restricted, but lenders run a thorough credit check that might lower your credit score.

The following details are often seen in a pre-approval letter:

  • Loan program
  • Interest rate
  • Purchase price
  • Loan amount
  • Down payment amount
  • Property address

However, each lender has a different policy regarding the details of a pre-approval letter. While some lenders might rely on the data you provided, others might require extra documentation.

Conduct a Home Inspection

An important step in the purchasing process, a home inspection is often paid for by the homebuyer. A competent third-party home inspection can provide you with further information regarding the present state of the house and whether repairs are required. This inspection can cost up to $500.

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It’s important to have a reputable professional carefully inspect the home you want to buy. This individual can identify problem areas that could cost you a lot of money down the road.

Frequently examined items in house inspections include the following:

  • Roof
  • Exterior
  • Basement, foundation and crawlspace
  • Heating
  • Cooling
  • Plumbing
  • Electrical
  • Fireplace
  • Attic, insulation and ventilation
  • Doors, windows and interiors

In specialty home inspections, you can have the structure inspected for wood-destroying organisms, mold, vermin and more. However, these inspections will carry an additional cost.

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Even though it's not usually legally necessary, some cities or counties in Utah may require you to have inspections before you buy a home. Because further inspections of your possible property might be required, it is a good idea to find out in advance what your house inspector plans to look at.

A qualified and experienced house inspection will identify specific problems, enabling you to make a more educated decision. Since you will benefit from the inspection as a homebuyer, you are often in charge of hiring and paying for the inspector.

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In Utah, obtaining a home appraisal is an essential component of the homebuying process. In a home appraisal, a professional real estate appraiser will determine its monetary value. Mortgage lenders usually require an appraisal to prevent a borrower from overborrowing, which can lead to significant financial issues down the road.

An appraiser will examine the inside and outside of your possible home and compile measurement data for the surrounding area. The appraiser will then give you a written report following a physical inspection. The report also considers how much similar properties in the area have recently sold for.

If the appraisal comes in low, it can cause snags or even the cancelation of the transaction.

Close Your Mortgage Loan

You can now finalize your loan after thoroughly reading the application. You must pay closing fees in order to cover the fees related to your credit report, appraisal and document processing. If you’re struggling to afford them, you can seek out closing cost assistance programs.

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Getting your documents ready for closing can take a while. MoneyGeek suggests completing necessary papers like:

  • Home insurance: With this, you will have financial protection against losses to the building's structure and possessions. It also provides coverage for third-party liability issues.
  • Title insurance policy and survey: This is done to make sure that the property is clear of liens and can be legally acquired.

Make sure you comprehend the fine print before you sign your loan. In the event that you come across any unfamiliar information, it is preferable to discuss it with your lender.

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When paying closing costs, you can expect the following fees to be included:

  • Appraisal fee: This is the sum paid to an appraiser to place a monetary value on your home.
  • Credit report: Information on the borrower's financial history is gathered and provided to a lender by a credit reporting agency.
  • Prepaid interest: This is the interest that has already accrued before your first monthly mortgage payment.
  • Escrow: The lender establishes a holding account for the borrower's property taxes, private mortgage insurance and home insurance.
  • Appraisal fee: This refers to the amount you pay an appraiser to determine the actual value of the property.
  • Origination fee: Some lenders charge a fee for evaluating and setting up your mortgage loan.

The seller might cover a portion of your closing costs in limited cases. When you make an offer, this is frequently negotiable. However, you should be aware that your lender may impose a limit on the amount a seller may contribute toward closing fees.

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Before finalizing the deal, ensure that you have done your research on the best places to buy a house in Utah, along with mortgage rates and necessary documents.

Being a homeowner involves a number of responsibilities, including putting aside funds for emergency savings and creating a budget for home maintenance needs. Now that you are a homeowner, the following step is to handle your monthly mortgage payments. To get a reduced monthly rate, one suggestion is to put in a larger down payment.

Keep in mind that homeownership involves frequent maintenance and repairs, so you should anticipate these costs instead of letting them surprise you down the road.

Utah Homebuying Details

When purchasing a home, there could be elements that are state-specific. In order to prepare yourself for a house purchase, don't be hesitant to speak with your lender or a real estate expert. Additionally, you may be eligible for homeowner assistance programs in Utah, which could aid you with the purchase of a new house.

Utah Housing First-Time Homebuyer Veterans Grant

Utah Housing provides a $2,500 grant to veterans and active-duty military personnel who are purchasing their first homes in the state.

Utah Homeowners Assistance Fund

The UHAF is a federally funded housing assistance program that helps homeowners in Utah who struggled to afford their homes during the COVID-19 pandemic.

Community Development Corporation of Utah Mortgage Assistance Program

The CDCU offers up to $5,000 in mortgage assistance to households with less than 60% of the area's median income.

Frequently Asked Questions About Buying a Home in Utah

Your search for a home in Utah may be challenging if you still have any lingering uncertainties. MoneyGeek has answered some frequently asked questions to help you get started on your Utah real estate exploration.

What are the most important questions to ask when buying a house in Utah?
Is buying a house in Utah a good idea?
Is it wise to buy a house in Utah in 2023?
How much income do I need to buy a house in Utah?
How much is property tax in Utah?
Which Utah city is the cheapest to buy a home?