The Buying Process in Utah: A Summary
- In the state of Utah, transactions are generally closed by escrow agents or title companies.
- After reaching an agreement, you’ll need to go through negotiations and potential repairs.
- You’ll have to work with a mortgage professional to finalize the loan.
- In Utah, the closing is often not done with all parties at the same table. This is different than most states where the buyer and seller usually come together at the same time.
- Most of Utah is under the base limit for conforming loans ($647,200 for a single-family home) but two counties (Summit and Wasatch) have much higher limits.
Buying a Utah Home, Phase 1: Negotiating Repairs and Updates
Once you have an offer accepted by a seller, you’ll need to go through the process of completing negotiations, which will include a review of disclosures, inspections, and (potentially) repairs.
- You will have an offer accepted by the seller, launching the escrow process.
- You will now deposit “earnest money” into escrow. This is simply a show of good faith that you fully intend to make the purchase.
- You can now review and sign off on disclosures, which are statements of known issues with the property.
- You can now perform inspections as part of your due diligence. A general home inspection is always wise, and in Utah a termite inspection is usually recommended as well.
- If you find any issues with the property, you may request changes to the contract or ask that the seller repair any problems.
- The seller can accept your requests or offer a negotiated compromise.
- You and the seller will negotiate back and forth until an agreement is reached.
- You can also negotiate a home warranty to cover the cost of repairs to the home.
Phase 2: The Mortgage Process for Utah Homebuyers
One of the first steps in the shopping process is getting pre-qualified. Once you have a home to purchase, you’ll need to complete the steps for finalizing the mortgage. This will likely include sending more information to the lender.
- After finding a home, you will have to complete an official mortgage application.
- Before they make a decision, the lender will send a “good faith estimate,” a rough calculation, to the best of their ability, for the final closing costs.
- You will now have to send a variety of documents for the lender to approve the loan. These may include items such as
- Pay stubs that demonstrate your typical earnings. Usually the last two pay stubs are required.
- Tax returns for at least the past two years.
- Bank statements on any bank accounts you own. These help lenders see your total savings, as well as income and expenses.
- Loan documents on any debts, including student loans, car loans, mortgages on other properties, credit cards, and more.
- Financial disclosures that impact your financial situation. Whether you pay or receive the money, you should send documents on child support, alimony, legal judgements, or anything else that effects your monthly budget.
- Explanation on any credit inquiries, which, statistically speaking, increase your chances of defaulting on a loan.
- Information on any large deposits that are outside of your regular income, especially if they will be used towards your downpayment.
- Gift letters, which explain the nature of any gifts that will be used towards the loan. These are especially important if the money will be used as a downpayment.
- Repeat or updated information on any of the above. Lenders want to see as much information as possible, so they are likely to request repeated information or documents that are up-to-date.
4. Assuming you are approved, you’ll receive preliminary loan approval from the lender. They will essentially state their intention to support your loan as long as certain conditions are met. Usually these conditions include a successful appraisal, as well as requirements that there be no changes to your financial situation.
5. An appraisal will be ordered. Assuming the estimated value is strong, the purchase can move forward. However, if the appraisal is low, the lender may request changes, such as a lower sales price.
6. The lender will request a title commitment from a title company. The title company will review the title and may preform a property survey. Title insurance can also be arranged at this time.
7. Homeowner’s insurance will be purchased by the buyer. Proof of this insurance must be delivered to the lending office. Additional hazard insurance may also be needed, depending on the location of the Utah home.
This process can be extensive, so it’s best to start as early as possible and collect documents immediately. Also, you’ll want to avoid making changes to your financial situation (new job, more debt, etc.) as this can disrupt your application.
Phase 3: The Final Closing in the State of Utah
Now it’s time to close the purchase. Unlike many other states, in Utah the loan is usually closed without both parties meeting together to sign the documents. The process can actually span a couple of weeks to a day
- First your lender will send the final loan documents to the escrow agent who is overseeing the transaction.
- The settlement will convene at the office of an escrow agent, closing agent, or title company.
- You will sign all appropriate documents to complete the loan.
- The buyer will pay the remaining funds for the downpayment and closing costs.
- The deed will be recorded with the appropriate municipality.
- The deal is done and you can move into your new Utah home!
Limits for Utah Conforming Loans
Limits for conforming loans are set by the Federal Housing Finance Agency, which determines rates on a county-by-county basis. Each county, depending on the median cost of homes, is given a specific limit. The vast majority, however, are under the base conforming limits. As of writing this article, the base limits for a conforming loan on a single-family home is $647,200.
These are the limits for the entire state of Utah except for two counties: Summit and Wasatch. Most of the state uses the base limits, including San Juan County in the southeast corner and Washington County in the southwest, as well as Box Elder county, which touches Idaho and Nevada.
For counties that use the base limits, the limit for a two-unit property is $828,700, the limit for a three-unit is $1,001,650, and the limit for a four-unit is $1,244,850.
There are two counties, however, that have higher limits. In Summit and Wasatch, which are both near Salt Lake City, the limit for a single-family home is $970,800, while the limit for a two-unit property is $1,243,050. A three-unit has a limit of $1,502,475, while the limit on a four-unit property is $1,867,275.
These are limits for conforming loans only. Financing above these amounts is available, so contact our team for more information on Utah jumbo loans.
Note: Loan limits are always changing and these numbers may no longer be accurate. For up-to-date conforming loan limits, contact our team today.
Downpayment Assistance Programs in Utah
Buyers in the state of Utah have access to a variety of downpayment assistance (DPA) programs. One of the most important organizations is the Utah Housing Corporation (UHC), which provides downpayment support for both first-time and repeat homeowners. There are, however, also local governments and nonprofit groups that provide support.
Utah Statewide Downpayment Programs
Down Payment Assistance Loan Program from UHC
If you qualify for assistance from the UHC, you’ll have access to a second loan worth 4% or 6% of your primary mortgage. Although the support comes as a second loan that needs to be repaid, this program can help you overcome the large hurdle of a downpayment, which often requires thousands of dollars.
There are two options for buyers: one for first-time and one for repeat homeowners. The option for a first-time buyer typically has a tighter purchase-price and income limit, but also has a lower interest rate.
Local Programs for Utah Buyers
While the UHC program is available across the entire state, some programs are targeted to specific cities, counties, or regions. Here are a few examples of local programs in Utah…
Neighborworks Salt Lake
Neighborworks is a national nonprofit organization that distributes housing support through numerous local offices across the country. In Salt Lake City, eligible buyers can access support that comes as a 5-year grant or forgivable loan with no interest.
West Valley City Down Payment Assistance Grant
Buyers in the suburb of West Valley City can receive a downpayment assistance grant that could go as high as $14,999. This program is only available for buyers purchasing a home in the boundaries of West Valley City, but, because it’s a grant and not a loan, it’s one of the most generous options in the entire state.
Own in Ogden
The city of Ogden, also in the Salt Lake area, offers downpayment loans as high as $10,000. Police officers and firefighters in the city can receive loans as large as $20,000, while city employees who currently live outside of Ogden can get a loan worth $15,000 to pay for downpayments and closing costs.
Common Requirements for Utah Downpayment Assistance
These programs have a variety of requirements. Most restrict their support to buyers with limited incomes. For example, the UHC program has different limits for family size and location; a three-person family purchasing in Washington County is limited to $95,800.
There are also limits on the purchase price, as these programs are intended for moderate, comfortable purchases. Many will require homebuyer education, especially if you are a first-time buyer, and most have credit requirements to ensure you are responsible with debt and borrowing.
These programs are always changing, and new programs may have been created. For up-to-date information on Utah downpayment assistance, contact our team today!
