Myths can cause a lot of damage. For instance, if you believe that vitamin C will cure a common cold, you might waste your cash on something that will not help you feel better. The same case applies to when you believe that mortgage rates are too high for refinancing to make sense.
If you are refinancing your mortgage for the first time, it is normal to seek as much information as you can. Unfortunately, there is too much false information out there about refinancing in Utah, such that you are likely to be discouraged because of pure lies. With that in mind, here are some things that you should know:
Myth #1: It is not feasible
Even with the increased rates by the federal government, refinancing remains a reasonable option. Some people might make you feel like it is too late to consider refinancing, but this is untrue. The critical aspect is to know why you want to refinance in the first place. Also, find the breakeven point of the loan. It is calculated by dividing the closing costs by the monthly savings. If the breakeven point is three years, refinancing is a wise decision. In case you move out before the period is over, refinancing might not be a good decision.
Myth #2: You will need to give a 20% down payment
Unfortunately, many people have been discouraged from refinancing by the myth that they have to give a 20% down payment. The fact is that you can be asked to put up way less down payment, which might even be 5%. However, remember that paying less does not mean that you have to buy private insurance. Consult the service provider before making a decision.
Myth #3: Refinancing requires a lot of time and effort
The mere thought of putting your papers together and submitting them to the lender for approval can seem overwhelming. If you have heard about this and are thinking of quitting before you start, reconsider your decision. The first step should be to compare your mortgage rate and compare with the market rates. Consult the lender to know if you will save money when you refinance. Making this call will only take minutes. Although you probably have to go through appraisal and income verification, it might not be the case if you want an interest deduction on your VA or FHA loan.
Myth #4: You should refinance with your current lender
You can refinance with any mortgage lender as long as they are licensed to operate within the scope. Therefore, you do not have to close with your existing lender especially if their terms are unfavorable. Ask for as many quotes as you can from different lenders.
In the end, the benefits of refinancing can never be overemphasized. Unfortunately, several misconceptions prevent homeowners from enjoying these privileges. In case you are considering refinancing, do not seek advice out there. Instead, consult a trusted mortgage planner. Understanding your options in and out will give you a clear idea of whether the option is feasible or not.