Your mortgage is most likely the biggest loan you have ever taken on. And while it did allow you to purchase your dream home in Utah, it most likely limited your finances significantly.
The good news is, you have several ways of making your life as a borrower easier, possibly even shortening the time you live with debts. Altius Mortgage Group suggests taking a look at mortgage refinance options, which make for a good strategy in the following situations:
1. When the interest rate reduction is no less than 1%
A lot of refinancing programs will allow you to have a reduced interest rate. However, it doesn’t automatically mean that all of them provide you with a better deal on your current loan. The rule of thumb is to check the rates first and then compare them, shortlisting only those that can bring the rate down by 1% at the very least.
2. When you want to pay off your debts sooner
Everyone wants to live a debt-free life, but not all have the financial ability to do so. Refinancing at the right time and the right reason gives you the opportunity to enjoy your life with fewer debts.
There are a few things to keep in mind though. First, paying your debts sooner means shortening the overall term of your mortgage, thereby also shortening the time you can pay off your debts. In other words, you’d have to pay more towards the new loan, but the benefit of doing so means minimizing the money you spend just towards the interest.
3. When you want to switch to a different type of mortgage
This is one of the most common reasons borrowers refinance their mortgage. There are a number of situations wherein swapping from one kind of home loan to another is ideal, such as when a better offer comes up and you can significantly cut back on your mortgage expenses. Through refinancing, you can swap a fixed-rate loan with an adjustable-rate one, or vice versa.
The bottom line is, it pays to explore all your options when it comes to paying your mortgage. Refinancing can provide you with an ideal solution, so consider this method when you find yourself in any of the above-mentioned situations.