Mortgage interest rates have always had their ups and downs, but finding a great time to refinance your mortgage can be extremely beneficial! You can use the extra money you save each month to pay down debt, do repairs on your home, or for anything.
These 5 questions will help you know when a mortgage refinance in Utah may make sense for you:
1. Can you Decrease your Mortgage Interest Rate by at Least 0.75%?
An example of this would be, if you have a $300,000 left to pay on your 30-year home mortgage, and you can reduce your rate from 7% to 6%, you’ll save an extra $197/month, or $2364/year!
This is worth it for most homeowners who would love to pay down debt on credit cards, or simply put the extra cash into savings.
2. Do you have a Credit Score of at Least 620?
Most mortgage lenders require a credit score of at least 620 to qualify for refinancing your mortgage, but to unlock better rates, shoot for a credit score of 690.
Also, if your credit score has dropped since your initial mortgage loan, your rates may not be as good as before.
3. Do you Plan to Sell your Home or Property Soon?
Home mortgage refinance loans come with closing costs, so it doesn’t make sense to refinance the property and pay closing costs if you plan to sell it sooner rather than later.
4. What is your Home’s Equity?
Mortgage lenders usually like to see a homeowner owning at least 20% equity in their home. This means that you owe no more than 80% of the current market rate of the value of your home, condo, townhome, etc.
To get an idea of what your home is currently worth, you can get a home property appraisal, or even do a search to see what other comparable homes in your area are selling for.
Look for similar lot size, same rough square footage, number of bedrooms, number of bathrooms, and condition of the property to get a general idea of your home’s current worth.
5. What is your Debt-To-Income Ratio?
For smart homeowners, having a debt-to-income ratio, or DTI of 35% or less is considered to be ideal. Your DTI is calculated by determining what percentage of your gross monthly (pre-tax) income is used for bills.
Some lenders will go as high as 40%, but generally like to see this at 35% or less. Debts will include things such as your mortgage payment, car payment, and credit card payments.
If you would like to refinance your current mortgage loan, or simply want to check your options, Spectrum Realty & Property Management works with amazing mortgage lenders in Utah that can give you all the information you need without being pushy!
Contact us today to get set up with a great lender!