Utah home loans have become attractive in light of positive growth of the real estate industry; however, residents should be aware of how a traditional mortgage loan works as well as the rules set forth by the Utah Department of Commerce Division of Real Estate. Additionally, the federal government and Utah's own lawmakers have been hard at work creating a new lending environment that promises to keep borrowers and mortgage lenders safe from risky lending practices.

Increased sales levels and attention to Utah home loans have come from the mid-year jump in mortgage rates, which resulted from comments by Ben Bernanke, the Chairman of the Federal Reserve. Bernanke said that to sustain economic growth changes to rates and practices would be coming in 2014 and beyond. This announcement meant amendments to mortgage loan rates, which in turn meant that families searching for a home loan would need to reconsider mortgage size based upon new data on interest rates.

The federally backed Consumer Financial Protection Bureau also recently updated the rules for mortgage companies and borrowers, so as to avoid another crash as was experienced in 2007. Some of the new rules for Utah home loans include a limit of 43 percent total on the debt-ratio a borrower possesses. High ratios are associated with risky lending. The rules are not designed to penalize borrowers; however, and are instead designed to reduce improper lending practices as well as make it easy for borrowers who qualify for a mortgage loan to obtain it from a lender of their choice.

Choosing the right type of loan for a mortgage requires the future homeowner to ask a few questions about his or her financial status as well as the expected income the family might enjoy in the future. If a borrower doesn't expect major change in income for several years, the best type of Utah home loans might be a fixed-rate mortgage, which is a very predictable type of loan. Over the life of the loan, the interest rate won't change. The expectation that interest rates have reached bottom and are likely to increase in the future means that a fixed-rate mortgage might be the most attractive type of loan.

Alternatively, there is the adjustable-rate mortgage for borrowers to consider, which features low payments at the beginning of the loan, based upon a low interest rate, but which may require higher payments in the future as interest rates start to change. Even if interest rates go down in the future, payments on these Utah home loans usually don't go down. However, the opportunity to enjoy a very low introductory payment may be attractive to some borrowers.

Interestingly, some recent mortgage activity has resulted in loans that might be considered a "hybrid" mortgage in that there are elements of a fixed-rate and variable-rate mortgage in the agreement. These Utah home loans may offer a low introductory fixed-rate at the start of the mortgage loan and allow the new homeowner to keep that low rate for up to a decade. Traditional variable-rate mortgages of the past usually wouldn't offer an introductory period any longer than 5 years.

A final type of loan offered by mortgage lenders today is an interest-only loan, which looks a lot like an adjustable-rate mortgage. These loans are sought by buyers who want the lowest payment possible, but they're only recommended if a borrower feels that his or her income would rise significantly in the next decade. No matter the type of Utah home loans considered by a future homeowner, the lending environment today is a changed one from what it was a decade ago, but securing a low rate in Utah is yet possible with banks sustaining low rate offers.