The mortgage market is ever-changing, and over a period of years or decades under which a typical mortgage operates, so are many people’s finances. Careers can change and expenses can be altered, and we’re cognizant of all these realities at Altius Mortgage Ogden.
One of the cleanest outlets for many people in these situations, when the market allows it, is a mortgage refinance. Refinancing involves replacing a current mortgage debt with a new one, just under different terms. Generally, the goal is to lower monthly payments and reduce the burden of a mortgage expense. Let’s look at some of the ways you might benefit from refinancing a mortgage.
New Loan Format
One of the primary functions of a refinance changing the format of the loan from an adjustable-rate mortgage to a fixed-rate mortgage. ARMs come with a lot of risk attached to their ever-changing mortgage rates, and this risk can become untenable for many people. Fixed-rate loans offer more stability and planning ability for people with less flexibility.
We all want the best mortgage rate available, and refinancing can be one of the best ways to accomplish this. Many refinancing projects will either extend the payback period to lower the monthly payment or, if the market rates are lower than what you’re paying, will create a new loan using the lower rates on the market. As a rule, if you’re in a tough financial spot and you see market rates at least two percentage points lower than your current loan, you should look into refinancing.
Refinancing is one of the quickest ways to raise a credit score. It allows you to make payments more easily, removing much of you risk for missed or partial payments. You can also use any savings you find through lower monthly payments to help pay down other existing debt, which will again increase credit score.
For some others, refinancing is a tool to build equity in a home. A form of refinancing called cash-out refinancing is common here – borrowers can actually receive a lump sum of cash if build up enough equity through advanced payments.
Want to learn more about refinancing, or any of our other mortgage services at Altius Mortgage Ogden? Speak to one of our brokers today.