A refinance analysis calculator will analyze several factors in order to reveal how much money you can potentially save by refinancing your mortgage loan. This helpful tool may also help you decide if refinancing is actually worth the closing costs you will have to pay to obtain a new loan.
Refinance Costs versus Benefits
Refinancing a mortgage loan can save homeowners quite a bit of money if the circumstances are right. In an ideal situation, a mortgage refinance will feature a considerable drop in interest rate which results in a significant savings for the homeowners.
Homeowners refinance their mortgage loans for a variety of reasons:
- Interest rates drop much lower than the interest rate the homeowner is currently paying.
- The homeowner originally accepted a subprime mortgage due to credit issues, but after a few years of timely payments is now eligible for a better mortgage loan product.
- A divorce results in a division of assets and one member of the couple must obtain an individual mortgage loan.
- A homeowner with considerable debt wants to consolidate the debt with the mortgage loan to create one loan, called a cash-out mortgage refinance.
- A mortgage loan with an adjustable rate is preparing to adjust upward, and the homeowner wants to refinance into a fixed rate loan to avoid future adjustments.
Refinancing does not always make financial sense. It is important to remember that there are closing costs associated with a mortgage refinance, so even if the new loan features a lower interest rate it still may not be worth the total costs involved. This is especially true for homeowners who may attempt to sell the home within the next couple of years, because the savings from the interest rate drop may not even equal the closing costs paid for the refinance.
This is why it is so important to utilize a refinance analysis calculator; you need to analyze the numbers and find out if a refinance even makes sense for your particular situation.
Use a Refinance Analysis Calculator
Refinance savings calculators are usually available on most mortgage lenders' websites. If your mortgage lender does not offer this tool online, or if the tool does not have all the features you are looking for, here is a brief list of some of the other refinance savings calculators that are available online free of charge:
- HSH Associates provide a calculator that will help you figure out what your new mortgage payment will be with a refinance.
- Bankrate offers a refinance calculator which will analyze whether or not it is worth it for you to refinance your mortgage.
- Calculators4Mortgages will help you decide on what mortgage refinance loan product is best for you.
Use the information provided by these calculators, along with the information provided by your mortgage lender, to decide if a mortgage refinance is worth it and how much it will cost you overall.
Necessary Data
When filling out the information needed for an online refinance calculator, be prepared with the following information:
- Your mortgage loan balance
- Your current mortgage interest rate
- The estimated market value of your home
- The terms (months) of your current loan
- Information regarding the new loan, including interest rate and terms
You may not need all of this information, and more complex refinance calculators may require further information. The more accurate the information you provide, the more accurate the information provided by the calculator may be. Do keep in mind, however, that these estimates will probably not be the actual amounts you wind up with if you obtain a refinance. These calculators are designed to be used as an estimating tool only.
