When to refinance your mortgage

When was the last time you looked at the fine print when you pay your monthly mortgage? You might be surprised how your current interest rate compares to rates available now. Perhaps you’ll want to consider refinancing your mortgage. The question, however, becomes whether or not it is a good time for such a refinance.

Here are some things to consider:

What is your current interest rate, balance due and length term on your current mortgage? You will want to have all of this information at hand before you go further.

If you refinance, what will be your projected payment amount, length of loan, interest rate and closing costs? Each of these pieces plays into a refinancing decision, but here we will focus on closing costs.

When it comes to closing costs, you want to make sure a refinance makes sense in the long-term. You want to look for the break-even point where your monthly savings “pay off” the refinance. In order to find this break-even point, divide the total closing cost amount by the monthly savings from your projected mortgage payment compared to your previous mortgage payment. This will tell you how many months it will take you to “pay off” the closing costs.

Once you know the number of months for the break-even point, you need to consider whether you will stay in your home for that long or longer. That becomes an important factor into whether you should refinance to lower your interest rate, consolidate debt, or lower your payment.

Here at First Utah Bank we have many refinancing options available, and our staff is waiting to talk with you about any questions related to refinancing a mortgage.