Common Refinance Questions


Determining if a Utah refinance mortgage loan is right can be confusing. That's why Advanced Funding, a Utah mortgage broker, has put together a list of common questions that homeowners have when considering refinancing.

What is refinancing?

Refinancing is simply getting one loan to pay off another. There are several reasons why you may want to consider refinancing your mortgage, for a list of reasons click here.

What does refinancing cost?

Typically, the closing cost of a Utah refinance is between one and two percent of the loan amount, lender fees included. You may choose to pay points (see below) to lower your interest rate, or you could want to do a Low- or No-cost refinance.

What are points?

Points (or discount points) are a way of lowering your interest rate. For more information regarding discount points click here.

How does the APR differ from the interest rate?

The rate refers to what percentage of your loan you will pay in interest per month, whereas the annual percentage rate (APR) is an adjusted percentage that expresses the yearly cost and also includes certain charges and fees.

What are FRM and ARM?

The interest rate of a Fixed-rate Mortgage (FRM) will not change for the life of the loan. Alternatively, an Adjustable-rate Mortgage (ARM) will be subject to periodical interest rate adjustments based on interest rates around the country.

Should I modify my loan or apply for a Utah refinance?

It depends. When you refinance, you may be able to get lower interest rates, but there are additional costs. On the other hand, a loan modification usually means extending the term of the loan and increasing the interest rate but adding no other fees. Use our free mortgage calculators to compare what each might cost.

What is PMI?

PMI stands for Private Mortgage Insurance. Borrowers with less than a 20% down payment on a Utah conventional loan are usually required to carry this insurance as a means of protecting the lender against default. Advanced Funding offers several options that can either minimize or eliminate the expense of PMI.

Will I need to get an appraisal when I refinance?

Maybe, depending on the amount of equity you have, your debt ratios, along with other factors will determine if an appraisal is required.

Does bad credit exclude me from a refinance loan?

Not exactly. When considering a refinance loan it's important to remember that the better your credit score the better interest rate you can get. So if you don't have perfect credit you can still qualify for a refinance loan but you'll want to make sure that you're lowering the interest rate on your loan enough to make a refinance worth it.

Do I need to have equity in my home to refinance?

Yes. The general rule is that you need to have a 95% loan-to-value ratio before you can refinance. This means that your home is worth about five percent more than the loan that is currently on the house.

Can I get cash from a refinance loan?

Yes. Depending on the type of refinance loan you opt for you can take cash-out to use for bills, home repairs, or whatever you might need it for. This option, however, should be carefully discussed with us, your local mortgage broker.

Can I "lock-in" an interest rate on a refinance loan?

Yes. Now is the time to refinance because mortgage interest rates are so low. You can "lock-in" your mortgage rate by contacting us today. More information about interest rates can be found here.

How long does it take to go through the refinance process?

A typically refinance when working with a Utah mortgage broker usually takes between two and four weeks. Getting your home appraised is usually where most hang-ups occur so if you can schedule a home appraisal right away then getting a refinance loan is usually very quick.

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