Utah has the most interesting demographic composition of any state since the state ranks first as the one with the youngest population, the lowest death rate, and the highest birth rate in the entire country. Home of the largest natural lake west of the Mississippi River, Utah is the only western state with 3.4% of its land area covered in water. Of the total 54,340,240 acres of land mass in Utah, sixty-seven percent is owned by the federal government. Four percent was set aside as reservation land for Native Americans. The state of Utah owns seven percent of the land area. Twenty two percent of the state’s land area is privately owned. Few crops are raised in Utah except for naturally cultivated fruit trees in certain parts of the Colorado Plateau. The most productive land for farming falls within the fastest growing and most populated counties and is, therefore, not farmed, but used for residential and commercial purposes. Livestock and dairy dominate the farmland production throughout other areas of the state because both of these products are more lucrative than food crops.
Utah’s beauty is diverse from the table-like flat area around the Great Salt Lake to the 13,000 foot mountains in the Uintah Mountain Range of the Rocky Mountains. The sedimentary rock that makes up the Colorado Plateau is where several state parks, six national monuments, a national recreation area, and five national parks were established to preserve the breathtaking beauty of the eastern quarter of the state.
Home Prices
The range of home prices is indicative of the extreme difference of population concentration across the counties within Utah’s borders. Five out of twenty nine counties have fewer than five people per square mile while Salt Lake County has a population density of 1,000 people per square mile. The average home price in Salt Lake County is $296,662 which is substantially higher than the statewide median sales price.
- Average Listing Price: $210,000
- Median Sales Price: $146,100
- Rank: 16th
- Highest Listing Average: $1,414,512 (Summit County)
- Lowest Listing Average: $98,509 (Daggett County)
- House Ownership Rate: 71.5%
Popular Utah Cities
Utah’s population is heavily concentrated in Salt Lake County which of course houses the capital city of the same name. Forty two percent of the state’s population resides on 0.98% of the land area. Four of the top five most popular cities in Utah are within this county.
- Herriman – Small town located to the southwest of the capital.
- St. George – Located in the southwest corner, in Washington county St. George is the only city in the top five cities that is not located near Salt Lake City.
- Lehi – On the drive south on Interstate 15 this beautiful city lies just north of Lake Utah on the way to Provo.
- West Jordan – A large suburb west of the capital city.
- South Jordan – A large suburb south of West Jordan.
The availability of jobs is the greatest draw for people to live within commuting distance of Salt Lake City. Other areas of the state are supported by the tourism industry.
Types of Mortgages Available
Most of the standard types of mortgages are available in Utah:
Fixed Rate Mortgage Loans – Loan interest rate will remain unchanged and the monthly payment is consistent for the loan’s entire term regardless of market fluctuations. Repayment terms of ten, fifteen, twenty, twenty five, thirty, forty or fifty years are available.
Second Mortgage Loans – Unlike the first mortgage on the property, this secured loan is placed in the second position on the title. The property is listed as loan collateral. Higher interest rates are common on second mortgages because the risk of default is higher since the first mortgage lender would receive full repayment with remaining proceeds from a sale covering the second loan on the property.
Adjustable Rate Mortgage Loans – ARM – Mortgage offering an initial interest rate much lower for the specified term of one, three, five, seven, or ten years. When interest rates are decreasing, ARM mortgages can be a very wise choice. Unique risks will face the borrower whose financial picture changes just before a new loan is to be written to finance the property.
Interest Only Mortgage Loans – The borrower is given the option to make a monthly payment that does not include principle during the initial loan period. After the interest-only period has elapsed, the full payment, including principle and interest, must be paid each month for the remainder of the loan term.
LIBOR Mortgage Loans – Mortgages backed by the London Interbank Market are offered with lower interest rates than most ARM loans. These loans were established minimize the impact of large market interest rate fluctuations on the borrower through established lifetime and periodic caps on increases.
Cash Out Mortgage Loans – Borrowers are allowed to extract additional money from the property above the amount of the existing loan on the primary residence. Repayment method and outstanding loan amount are negotiated as a new loan.
Home Purchase Mortgage Loans – Generic category all mortgage loans designated for the purchase of a residence. Fixed rate and ARM mortgages are part of this category.
Reverse Mortgage Loans – This type of loan is not intended to be repaid until the home must be sold, the borrower passes away, or the senior moves to another residence. Any homeowner over the age of 62 who wishes to have a consistent monthly income drawn from the equity of their home, can apply for this type of loan. The proceeds can be given as a lump sum, monthly payments, or a credit line.
Refinance Loans – Relatively new loan offering written when mortgage interest rates are lower than an outstanding mortgage loan on the property. Homeowners who wish to pay a lower amount each month, want to draw on the equity in the home, or see the advantage of securing a fixed interest rate loan over their existing ARM, will apply for a new loan and enter the approval process to complete a refinance.
Home Equity Line of Credit Mortgage Loans – HELOC – An open credit line that resembles a prepaid credit account when a borrower has not determined a specific amount to draw from the equity balance. This loan carries a variable interest rate that is normally based on the prime rate.
Home Equity Loan – Closely resembles a second mortgage loan written against the home equity. The borrower will receive a check or funds transfer containing the lump sum when the loan transaction is approved. Separate monthly payments are paid in addition to the original loan. This loan is amortized according to a separate schedule.
Specific Utah Laws
In 2004, the Utah High Cost Home Loan Act was signed into law. This legislation was designed to protect borrowers through interest rate limits following default on a loan, prohibiting balloon loan payments, and restricting the arbitration clause. In addition, limits have been placed on refinancing and other aspects of the mortgage industry.
Mortgage Rates
Jumbo Loan – Fannie Mae has set $417,000 as the threshold for standard to jumbo loan amounts. Slightly higher interest rates are associated with jumbo mortgages because the risk calculation attached to a potential default.
Super Jumbo Loan – When the loan amount exceeds $650,000 for a single-family residence, the loan falls into the class of super jumbo loans. With an even higher risk of default, these loans carry a higher interest rate than jumbo loans.
COFI – Cost of Funds Index reflects the interest paid by savings institutions in Arizona, California, and Nevada which is termed the eleventh Federal Home Loan Bank District. This classification ARM mortgage will react more slowly to market changes in interest rates. This index normally lags two months behind the market.
COSI – Cost of Saving Index is based on the Golden West Financial Corporation (GDW), which is the average of all the interest rates on the deposit accounts within institution subsidiaries. A one-month reporting lag impacts the COSI index.
12-MTA – 12-Month Treasury Average is one of the newer indices, which is based on the twelve month average of all the monthly average yields on the US Treasury Securities. A modernized version of the COFI index, the 12-MTA is considerably more stable and offers negative amortization when interest rates decrease. Borrowers shoulder the risk of payment increases when interest rates rise quickly.
Foreclosure Process
Modeled after the state of California’s foreclosure process and instituted in 1961, the state of Utah has a non-judicial procedure for most foreclosure proceedings. Lenders are given the option to use a judicial foreclosure when a mortgage is in default. The average time for completion of the foreclosure process is 135 days. Primary security instruments include the Deed of Trust and the Mortgage.
Twenty days before the property is to be sold at auction, a notice must be provided to the borrower and filed in court. The auction must be advertised in the correct section of the newspapers within the county where the property is located for three consecutive weeks prior to the auction. The highest bidder at the auction is required to pay $5000 at the auction proceedings and the balance within 24 hours.
When the lender files a complaint in court against a delinquent borrower, the debtor is normally given a specific period of time to pay the arrears amount plus any associated fees. If the payment is not received, the court will order the sale of the property according to the rules of foreclosure.
In the state of Utah, borrowers do have the right of redemption of the property within the court-specified period of time, and there extension of the deadline is very common.
Utah is a non-recourse state which means that the lender is unable to pursue the borrower for any balance owed after the sale of the property has been completed, and the sales price has been paid.
Conclusion
Utah is unique because most of its population increase comes from natural population growth and not immigration. Home prices do not fluctuate radically because the population is not as transient as the surrounding state populations. Because of the high percentages of publicly owned land, most of the population relocates along the interstate highway corridors that were developed when the interstate highway system was started in 1956. The rugged terrain to the east of the city populations and the desert sands to the west of the Great Salt Lake have kept the highest concentrations of people in the center of the state. As people from other states have discovered the breathtaking beauty that is unique to the 45th state of the union, the southern third of the state has seen tourist related areas grow exponentially. The cost of living in Utah is lower than many states, and the fiscal condition of the state is considered healthy.