Crunching Numbers with a Refinance Calculator

By Kristi Shibata
Calculators for Mortgages Columnist

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After researching, financing, and settling into a home mortgage that meets your needs, suppose you see interest rates fall, leaving you with the question of whether refinancing is a viable option. As appealing as refinancing may be, there are important factors to take into consideration before jumping to a new mortgage plan.

The Fees behind Refinancing

Nothing seems to come free these days, especially when it comes to financing your home. Most lenders have specific costs and fees associated with refinancing. Asking about these fees first can save you time in the end. Find out from your lender if there are any of the following upfront fees:

• Costs For Points
• Application Fees
• Credit Check Charges
• Attorney Fees
• Title Search Fees
• Appraisal Costs
• Local Taxes, Etc.

These costs can add up and play a major role during the refinancing process.

Refinance Calculator to the Rescue

Once all fees have been discussed, a refinance calculator can help determine whether refinancing can pay off in the end. Refinance calculators take into account your current monthly payment, the balance left on your mortgage, your current interest rate, the new interest rate, the term of the mortgage, and your estimated closing costs. Once calculated, you can see your new monthly payments, total savings, and how long it will take to recover your closing costs. Some refinance calculators even include options to compare different loan offers.

If you find yourself contemplating refinancing to a lower interest rate, remember that there's more to the process than meets the eye.

Sources:

Bankrate
HSH




About the Author
Kristi Shibata is a public relations and communication specialist. She graduated from University of California, San Diego, with a BA in Communications.