If you plan to apply for a new mortgage in Salt Lake City, you might find it encouraging that the city ranks as the 10th best place to own a house based on a new analysis.
The new study used the median home price, state income tax rate, and effective property tax rate for determining the Utah capital’s standing on the list. As of April, the average price of a home in the city cost $397,600. State income taxes are not really reassuring at 4.95%, but the effective real estate tax of 0.48% is much lower than the national average of 1%.
Is It an Overpriced Market?
While Salt Lake City can be an excellent place to invest in a house, many believe that the pace of salary growth has failed to keep up with rising property values. A new home worth almost $400,000 already prices out most buyers in the city, where people are forced to look elsewhere and find more affordable properties in suburban areas.
Still, the city remains a popular place because of job prospects and economic growth. When you compare the 0.48% effective property tax rate to 3.4% in New York’s Rochester area, owning a house in Salt Lake City seems a better option.
Recent Mortgage Rates
A typical 30-year mortgage with a fixed rate of 3.94% in Utah represented a 0.29% decline compared to the price in April. This rate can only apply if a borrower has an excellent credit history, a higher down payment, and other details that affect a lender’s decision. On the other hand, a 15-year fixed mortgage carries an average rate of 3.44% that’s also lower by 0.34% in the last three months.
In Salt Lake City, you should expect to pay a 4.44% average mortgage rate for a 30-year fixed mortgage with a 20% down payment. As an example, you can incur around $1,172 of monthly payments for a principal loan amount worth approximately $281,400.
Will Rates Increase?
The Federal Open Market Committee (FOMC) doesn’t expect rates across the U.S. to increase drastically anytime soon. Any rate hike will depend on policy changes, the country’s economic growth and demand for housing loans, among other factors. Low-interest rates shouldn’t also serve as the primary reason for taking out a loan.
You can always choose to refinance once rates go even lower after you buy a house but doing so requires careful thought. Weigh the value of closing costs against the possible savings from paying interest over the term of the original loan. You might be better off with the old one if closing fees will be more expensive.
Find a trusted mortgage planner in Utah once you encounter your ideal home for sale. There’s no guarantee if mortgage rates might remain the same in the coming months, so you should plan as early as now to know how much you need to save on a down payment. How much are you willing to spend on a new house in Salt Lake City?