Is Refinancing Worthwhile?

Refinancing, when done for the right reasons and the right way, could give substantial savings or even shorten your loan term. Unfortunately, this strategy could also backfire and result in excessive closing costs, as well as higher interest payments for a long time.

This is why if you’re thinking of refinancing, you need to make sure that the savings will justify the cost and effort of doing so. Besides, the last thing you would want to happen is to end up paying more and put you at risk for future financial troubles.

When you want long-term savings

Refinancing from a 30-year loan to a 15-year term makes sense since it can give you substantial savings. This is especially true if the new rate is lower than your original rate. Do take note that it comes with a higher monthly payment, as you are paying off your loan sooner. There are, however, substantial rewards like lower rates and savings in your total interest costs.

Refinance mortgage companies in Salt Lake City note that you can also choose to refinance to a longer term (from 15 years to 30 years) if you’re currently experiencing financial difficulties. Just keep in mind that doing so comes with financial risks because of the costs involved. Extending your loan term may lower your monthly payments, but this could also mean paying more money in interest.

New payments and rates

Doing your research and talking to a reliable lender can help you learn more about refinancing and find out if you can benefit from it. Refinancing has many benefits, but bear in that depending on certain situations, the costs could sometimes outweigh the benefits. This only makes important to know more about the process and the fees involved.

It is a good idea to know your credit score to find out the new mortgage rate you’ll receive. You can also talk to a realtor or try using home valuation websites to find out the value or your home. A refinance calculator can also help you decide if taking the plunge makes sense by estimating your new monthly payments.

Comparing rates and minding closing costs


Many of those who want to refinance think that it is a lot more convenient to do with their current lender. While there is nothing wrong with it, it is also a good idea to compare mortgage refinance rates. You can check with your current provider and other lenders to get the best possible rate. Keep in mind that refinancing without comparing fees and rate shopping can cost you more in the long run.

There is also a need to consider the closing costs and other associated fees. If you’re refinancing to pay your mortgage early and get savings, find out if there is a penalty for paying your loan sooner. Also, do take note that closing costs can add up when the lender charges unnecessary fees. You may be able to go for a non-closing cost refinance, but this usually comes with higher rates.

Some lenders may waive the closing costs, but will then charge you with a higher rate to cover the closing costs. The problem with this is that there is always the risk of it being costlier than deciding to pay the fees upfront.

Refinancing has its risks, but it also has benefits. If you are considering refinancing but have some questions about it, talk to a reliable lender or a refinance mortgage company.