Many people overlook the value of chasing after a mortgage refinance in helping them improve any financial struggle they might have. Doing so can help negotiate a better term and save you a considerable amount of money.
In the excitement of qualifying for a mortgage, first-time home buyers often fail to put much thought into the terms of the loan. It is only after the dust settles and they start making payments does the reality sink in. In most cases, people tend to settle for a high-interest rate or large monthly payments.
If you made such oversight, then it is high time to refinance your mortgage in Salt Lake City. Doing so can help you ease any difficulty or even save your home from foreclosure.
Lower the interest rate.
If the initial interest rate on the home loan is driving you up the wall, you could lower it to a more manageable level.
Traditionally, it was advisable to consider refinancing if the move could shave off at least 2 percent off the interest rate. However, many lenders agree that even savings of 1 percent make it worth your while.
Doing so saves you some money over the life of the loan. Refinancing also speeds up the rate at which you build equity in the home. If you can apply the savings that result toward paying off the principal amount, you can pay off the mortgage early.
Get a better mortgage plan.
Typically, most home loans fall into two categories — adjustable rate mortgages (ARM) and fixed-rate mortgages. Fixed-rate mortgages have a fixed interest rate over the life of the loan. On the other hand, ARM starts out with low rates, but the periodic adjustments can make them higher than the fixed rate.
With refinancing, you can switch between the two to take advantage of the lowest interest rates. If you plan on disposing of the home in a few years, you can switch to an ARM. That way, you can take advantage of the initial low rates.
If you settled for unfavorable terms when negotiating a mortgage, you can right this oversight. By refinancing your mortgage, you have a chance to snag better interest rates and terms.