Many Utahns commit all kinds of mistakes when applying for a refi, but the biggest one is probably not to refinance at all. Even if you’re already happy with your repayments, it always pays to consider how much money you could still save per year if you reset the clock.
Refinancing doesn’t make sense to everybody, but you could save thousands of dollars if you hit the mark. As every smart borrower would do, you must ask yourself the right questions first to know the right answer for your situation.
How Much Rate Reduction Can You Get?
The difference between the old and new interest rates obviously defines how much savings you can reap per month. Of course, you have to worry about the closing costs too, but a 1% rate reduction doesn’t seem that enticing to start all over again.
Always calculate and compare old and new monthly rates to see the bigger picture. Add the closing costs into the mix to measure how long would be your break even period.
How Long Do You Plan to Stay in Your House?
Refinancing can profoundly save you a serious amount if you’re moving soon or in a foreseeable future. If you switch from a fixed-rate mortgage to an adjustable rate mortgage (ARM), Altius Mortgage Group says you can enjoy an incredibly low mortgage rate in Utah, sell the property before the rate adjustment kicks in, and save thousands in the process.
Make sure, though, that the deal doesn’t involve too many fees because you don’t want to pay a lot of fees if you wouldn’t be living there over the long haul.
Above all, whether the rate is fixed or adjustable, take into account the duration when you’d actually stay in the house. If you’re moving too soon, you might not have enough time to reach the break-even period.
How Sure Are You When You’re Really Moving?
Saving from refinancing only works if you can accurately predict you’re life plans down the road. If you’re taking an ARM because you expect to really live in another location in the future, make sure it better happens because the adjusted rate might eventually cause you more monthly.
Refinancing only rewards the prepared. If you’re full of uncertainties with your plans in life, a refi can be a risky bet.