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When using a refinance calculator, you'll be asked to enter the following information for your current mortgage loan:
- The original loan amount
- Interest rate (APR)
- Total length (repayment term): mortgage loans usually have repayment terms of 15 or 30 years.
- Time remaining : If you have a 30 year loan, and have made payments for five years, the time remaining would be 25 years
- Remaining principle on current loan: This is your present mortgage balance. Your monthly mortgage statement should show
this information.
Now you'll enter the refinancing terms you're considering:
- Amount refinanced: This is the amount you want to borrow for your new mortgage.
- Interest rate of new mortgage: Enter the interest rate for the new mortgage
- Term length : Enter how long you'll have to repay the new loan. (Typically 15 or 30 years for mortgage refinancing loans).
- Cash out amount, if any: Enter any additional cash you're taking out, for debt consolidation / payoff, home improvement,
vacations, medical expenses or whatever.
- Closing costs, discount points, down payment amount: The refinance calculator displays an estimated amount of closing costs,
not including discount points, on the next screen. You can use this estimate if you don't know the amount of closing costs.
Use the drop-down window to select the appropriate option for paying closing costs:
- Paid by cash or check: You're contributing funds to cover closing costs
- Rolled into the loan: Your refinanced mortgage amount will include closing costs.
- Paid by Lender: Your mortgage lender pays the closing costs (but you'll pay a slightly higher interest rate).
After clicking the "calculate" button, the first section of the next screen displays a comparison of your current and proposed mortgage amounts,
interest rates, and if applicable, any cash out amount and closing costs for the new mortgage.
The next section compares the interest you'll pay for the full term of your existing loan and for the new loan.
The third section of the screen shows your current monthly payment compared to the estimated monthly payment after refinancing. Finally,
the calculator indicates the net estimated savings after payment of closing costs (if applicable.) This is the "bottom line" figure that can help
you decide whether or not to refinance. You can use the refinance and comparison calculators for reviewing multiple refinancing options.
Once you've tested different rates and figures, try comparing the lowest rates offered by mortgage refinancing lenders. There results are
tailored to you, and there's no obligation for seeing if you qualify for a refinancing rate lower than your current rate. With lenders competing
to offer you their lowest rates, you could end up saving thousands over the course of your loan!