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Mortgage Refinancing: Important Things You Need to Consider

Refinancing with an approved stampedRefinancing a mortgage involves getting a new one to replace an older one. It helps borrowers get a better interest rate and loan period. It’s also a good way for borrowers to convert their loans and get better terms — which usually applies for people with a good credit history. It can be tricky for those who don’t have good credit or too much debt, though.

When is a good time to consider refinancing and who should do it? Knowing the basics will help in making the best decision.

Advantages of Refinancing

One of the major advantages of refinancing is a lowered interest rate. Low-interest rates are usually offered to borrowers who pay their bills on time, have a low debt to income ratio, and work hard to keep their credit scores high. The process of refinancing is almost the same as taking a new loan:

  • The home is appraised
  • Lenders determine how much they want to loan, if that is the intent of the borrower
  • This money can be used to do home improvements, etc.
  • If a borrower has good credit scores and substantial equity built up in their home, they get a low rate
  • The balance on their mortgage loan is also lower

What Should a Borrower Do to Refinance?

The first thing borrowers should do to refinance their mortgage is deciding how they want to repay the loan. If the money is for renovations and upgrades, then the possibility of higher revenue after a sale is one way to repay. If the money is for paying for other items, then it’s important to make a plan on how to repay. Talk with your chosen lender and discuss your options.

It may happen that refinancing your mortgage in Utah is not viable. If needed, Altius Mortgage Group recommends talking to a lawyer who works in real estate to get some clarification on some complicated paperwork.

Costs Associated with Refinancing

Refinancing is almost the same as getting a new loan. The costs associated with refinancing and getting a new loan are:

  • The application fee
  • Title Search and Insurance
  • Attorney Fees
  • Loan origination fee and associated points

It’s a good idea to run all these costs and figure out if refinancing is essential. There are calculators online which can help in this process, as well.