Refinancing a current home mortgage offers an excellent option for quite many people. For instance, your finances have had a recent major change to it, or you no longer find your existing mortgage situation satisfactory. It can help your household cut back on expenses every month and use the saved up money for other budget components.
However, it’s important that you first establish that a Utah refinance mortgage program is the best solution. And asking yourself these questions before you push through will help you gauge how ideal it is for your situation.
How much longer will we live in this house?
In the event you’ll sell your house in a couple of years, refinancing may not be the best path for you to take. The same thing applies when you’ve almost paid off your entire housing loan: refinancing, while beneficial in certain situations, comes with costs that may lead to greater expenses when done incorrectly.
In most cases, refinancing makes sense when you plan to live longer than just two or three years in the same house.
What difference does my answer above make?
You should first calculate the length of time it would take you to “break even.” Breaking even will occur when you’ve recovered from the refinancing fees. To calculate for this, just divide the refinancing costs by the amount you’ll save on monthly payments. The answer represents the number of months it’ll take you to reach the break-even point.
How low a rate can I get?
Most consumers in Utah, or any other part of the country for that matter, refinance to obtain a lower interest rate. You may want this for reasons such as saving for a college fund or retirement. Keep in mind though, that each household has different financial needs. So even if a friend of yours refinanced for the same reason and saved a lot of money, it won’t automatically mean you’ll enjoy the same benefits.
In other words, you have to make sure that you can lower your interest rate by not less than 1.5%. And that it can save you money even after you’ve paid all the fees associated with refinancing, such as application fees, appraisal reports, as well as legal and closing costs among several others.