As a homeowner and a borrower, you want to get the lowest interest rate on your mortgage. It would be wise to consider refinancing, particularly when you are paying about 3% or higher for your mortgage. Some housing loans are available at 1% and this is a fixed rate. You can enjoy this rate through refinancing.
Read on to learn how.
Why Choose to Refinance?
Refinance loan refers to a secured loan, which an individual obtains to pay off the existing loan against the current equity. City Creek Mortgage agrees that refinancing your mortgage in Sandy can save you hundreds, if not thousands of dollars for the next two to three years. In a way, refinancing can provide the borrower a debt solution other than filing for bankruptcy. Bankruptcy is always painful, especially when you can never regain what you have already paid for.
Things to Consider
Remember that the goal of refinancing is to save on interest payments. In maximizing the process, you have to consider if it will lower the monthly installment payments or if you will get a lower interest rate.
Another thing to consider is whether the period of payment could be significantly shortened if you are going to refinance your loan. Nevertheless, this could be a staggering decision when your house has higher market value. The underpinning of this is that the higher the market value, the higher the price and the higher the interest rate.
What You Must Do
While interest rates are always fixed, they may also be floating and adjustable. As such, you have to switch to fixed rate mortgages, which are possible through refinancing. When your interest rate is adjustable, it means it moves along with the changes in the real estate market. Comparing the current housing loan interest rate with that of the existing rates in the market would be a necessary first step.
As you are aware now, interest rates are initially lower, which will eventually expand at a specified period (e.g. yearly, after every four years). Through refinancing, though, you can modify the interest rate structure of your loan in a way that it will be more convenient for you to pay.
The market value of your property will affect the interest rate package available for you. So, if your goal is to reduce the interest rate, then consider refinancing it. Do not transact for the first refinance institution that you will encounter. Consider at least three refinance offers and then study them. This way, you can compare the interest rates before making a decision.