Many People with Mortgages Don’t Refinance: Why Are They Holding Back?

A refinance is a welcome option for Utahns who have mortgages with high interest rates. Electing to apply for it allows you to trade your current loan with one that has much lower interest. In addition, you can switch from a fixed to an adjustable-rate loan or get a shorter or longer term when you refinance your mortgage in Ogden. Gleaning from companies such as Wasatch Peaks Credit Union, you can even turn your home equity into cash, which you can use to pay off your other debts with greater interest more quickly.

In theory, a refi is advantageous on many levels. However, in practice, it is not necessarily for everyone. Here are two main reasons why some Utahns with high-rate mortgages do not pull the trigger on it:

Common Sense

It is hard to justify a refinance when the remaining loan balance is too small. It constitutes a new mortgage with a brand new amortization schedule. In essence, it will reset the clock of the loan. Anyone who understands how amortization works knows that most of the early payments are intended to cut the interest down. Instead of making you enjoy savings down the road, a refinance might actually cost more money, especially when the other fees involved in the deal are considered.


As you are making the most of your credit cards and neglecting your statements, it might not occur to you that you are affecting your credit score or creditworthiness. The punctuality of your credit card payments and the amount of your debt has the most significant influence on your credit record. If you fail in these areas, your credit score will fall.

You might ask what is wrong with having a low credit score. Because so many companies nowadays judge you according to your credit record, having bad credit can make your life very difficult. For example, you might have problems finding a job or a place to live. In other words, having bad credit has many repercussions.

Credit records show your chances of defaulting on a credit card or loan commitment. With that in mind, having a low credit score means that you are a high-risk borrower. As a result, bankers or lenders will make you pay for this risk and charge you a higher rate of interest.

If you get a loan with a bad credit record, you will eventually pay more in interest than you would if you had a higher credit score. Furthermore, if you borrow more money, you will have to pay a rate of interest.

A bad credit score can disqualify anyone for a refinance. Missing a couple of mortgage payments in the past can hinder anyone from snagging a lower rate—the top motivation for securing a refi. Delinquent borrowers know this, which is why they do not bother to apply.

When Should One Refinance?

Couple signing mortgage

Mortgage refinance products are beneficial to those who can save more dollars when all is said and done. To qualify, good credit, steady employment, and adequate liquid assets are necessary.

Are you a good candidate for a refinance? Analyze your situation and think critically to determine whether it is worth your while. If it is, your mortgage can become much more affordable.

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