With today’s historic low interest rates many Utah families are refinancing their home to take advantage of either payment savings, reducing the term of their mortgage or both. Currently, rates are lingering in the mid 2’s to low 3’s depending on the term of the mortgage. I still remember when rates dropped to 8% in the early 90’s, and a refinance boom was under way due to the incredibly low interest rates available.
Utah mortgages at the time were much smaller in size as Utah’s real estate market has a tendency to lag behind the national figures. It takes longer for the home values to increase, but they certainly do get there. So many homeowners ask us here at Trillion Mortgage what the best way to use their payment savings are. Here are some ideas on what you could do with your extra money.
1. Home improvements. You have a room that needs new carpet or paint- all the way up to full redo’s of kitchens and bathrooms. Some even take on additions to a home or finishing a basement. Many ask where the money is best spent as far as improving home values are concern. The answer varies a bit depending on your home, but updated kitchens and bathrooms are some of the better investments available. Finishing a basement will usually only add about the same dollar amount to the value of the home as what you put into it.
2. Reducing debt. For years Utahns have allowed credit card debt to soar- leading the nation quite often in debt to income ratio’s, bankruptcy rates, and defaults. Using the low Utah mortgage rates to attack those debts is an excellent way to spend the money. Trillion Mortgage recommends starting with unsecured credit card debt, paying the highest interest loan off first then tackling the next- adding the payment savings from each paid off debt on the next. Most Utah families will pay off all their consumer debt in 1-3 years using this formula, and will pay off their mortgage in 5-10 years if the mortgage is tackled after the other debt is paid off.
3. Shortening the mortgage term. Many Utah homeowners find they can drop from a 30 to a 15 year mortgage without increasing their payment when they refinance- due to the incredibly low rates available today. A 15 year mortgage is sitting at 2.625%- and a 15 year mortgage will save tens of thousands of dollars over the lifetime of the mortgage.
4. Vacation. Lets face it. Saving money feels good, and sometimes a vacation feels even better. Utilizing your savings from your refinance you can plan and take an extra vacation.
5. Savings. I had to add this to make sure we all feel some guilt over not saving enough.
Regardless of where you spend your hard earned dollars, taking advantage of today’s low Utah Mortgage rates makes a lot of sense.
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