Altabanking, Should I Refinance My Mortgage?

Mortgage rates remain near historic lows and Utah homeowners are benefitting. Current low refinancing rates are helping Utahns consolidate debt into fewer loan payments, decrease the loan term and save money on future interest, or even assist with new home improvements.

Do low-interest rates have you thinking about a mortgage refinance? Refinancing your Utah home is an attractive option right now. Yet, many homeowners don’t know where to even begin. Will I qualify? What are the terms? Will a refi help me save money? How long will a refinance take?

Step number one: Call your local mortgage lender. Community banks have their pulse on the local Utah market. They use this expertise to identify the unique needs of each customer and, oftentimes, community banks will offer free mortgage reviews. As overwhelming as a mortgage refinance sounds, this one phone call is the simplest way to kick off your research.

Here’s some local news for Utah homeowners: “The mortgage industry has had record application volume, which is great, but it does pose challenges,” explains Ben Pack, President of the Mortgage Division at Altabank, a full-service bank headquartered in American Fork. “One of the biggest is the availability of liquidity and funds to fund loans. Even big banks and brokers are quoting people 60 to 90 days to get a deal done.”

But don’t let that message get you down. The benefit of partnering with a local bank can make all the difference. “That’s one of the advantages that Altabank has,” Pack adds. “We are the underwriter. We have full control. We can still get deals done in under 30 days.”

Right now, the cash-out refinance is an attractive option for Utah homeowners to consider. A cash-out refinance has two benefits: It allows you to turn your home equity into cash and offers you the opportunity to lock in a lower interest rate on your new mortgage.

The longer you make monthly mortgage payments, the more equity you build in your real estate investment. A home’s equity equals the amount of the home’s value that you have paid off. Equity builds: (1) when your home value increases, and/or (2) as you pay down the mortgage principal through those monthly payments.

As values of Utah real estate rise and mortgage rates dip to all-time lows, many homeowners are in an ideal position today to cash out their equity.

Home equity lines of credit (HELOC) present another beneficial option for Utah homeowners, depending on your overall financial goals. The difference between cash-out refinancing and home equity lines of credit (HELOC) vary in loan terms, how the funds are received, interest rates, and closing costs.

Loan terms: Cash-out refinancing pays off the existing mortgage loan, therefore, resulting in an entirely new mortgage. Home equity lines of credit (HELOC), however, are essentially a second loan or “second mortgage,” in addition to the existing loan.

Receipt of funds: Cash-out refinancing offers you a lump sum at closing, whereas a home equity line of credit (HELOC) allows you to withdraw from the line of credit as needed during the draw period (typically ten years).

Interest rates: A cash-out refinance is offered via a fixed-rate mortgage or adjustable-rate mortgage. A home equity line of credit (HELOC) typically has a variable interest rate that changes in conjunction with an index, typically the U.S. Prime Rate.

Closing costs: Cash-out refinancing incurs closing costs, like your original mortgage. Home equity lines of credit (HELOC) usually have no or low closing costs.

According to Altabank’s Pack, today is the best time to take action on a mortgage refinance. “You know, right now is the perfect time to apply. We have new technology on phone apps and on our website that make it simple and easy. With values at all-time highs and rates at all-time lows, this is the best time to save money and to get things going.”