With Utah now being the fastest-growing state in the country, more and more homebuyers and property investors are looking to purchase here. Much thanks to the stable and strengthening economy of The Beehive State, numerous money-saving opportunities await even the current mortgage borrowers.
It is for this reason that finance expert Wasatch Peaks Credit Union recommends that existing borrowers look at their refinancing options as early as possible.
There are some good reasons to do so, one of which is the chance to reduce the overall cost of your mortgage, which can mean paying off your debts and enjoying a mortgage-free life sooner than expected.
What happens with a refinance program?
At its core, refinancing means paying off your current loan to secure a new one. The term ‘new’ applies to every aspect of the mortgage, from the capital to the interest rate to the term. This definition would make you wonder why borrowers would even want to do it.
Indeed, refinancing is not for everyone, but there are certain situations wherein they can prove quite helpful.
So why “swap” your current mortgage with a new one?
The two primary reasons to refinance is to take advantage of a lower interest rate and to monetize the accrued equity on their home. In most cases though, borrowers opt for a refinancing program for the former.
For instance, you may want to consider switching from a fixed-rate mortgage (FRM) to an adjustable-rate mortgage (ARM) when the current (and foreseeable) interest rates for the latter dip down lower than what you have on your existing loan.
This makes sense especially when the term left on your FRM runs for the same length of time as the offered ARM. This can save you quite a lot of money, which you can use for other important things.
The bottom line is, refinancing can help you get out of your debts sooner, given that you properly plan for this huge step in your life as a mortgage borrower.