After you have a good reason for refinancing and have determined that it’s the right time for you to do it, then it’s time to crunch the numbers. When a mortgage refinance calculator is used it can help you with shopping to find the best mortgage for you.
You are going to need to know (or make an educated guess) on your new loan amount and interest rate.
After you have inputted the data, this tool calculates what your monthly savings will be, along with your lifetime savings and new payment, and accounts for what the estimated costs of the refinance will be.
When you use a refinance calculator it gives you an excellent idea of what you can expect. What is even better is that after you have a couple of estimates from a few mortgage lenders, then you can enter in the terms you have been offered into the calculator so that you can determine which provides you with the best deal.
It is now time to do some legwork – or most likely phone calls and web work. You will want to search for the best mortgage refinance rate and obtain a loan estimate from every lender. Each of the potential lenders must provide you with an estimate within a three day period of getting necessary information from you.
These estimates are a basic three-page document detailing the loan terms, estimated fees, and closing costs, as well as your projected payments.
Compare the details of the loan for every lender and then determine which one will be the best for you. It is an excellent time to use the mortgage refinance calculator to your best advantage.
– Determine what your goal is. We have discussed this: Make sure you are refinancing for a good reason. Your aim to shorten – or maintain at least – the current loan term that you have while getting a lower interest rate.
– Find out what your current credit score is. Obtain your credit sore and check out your credit history. The better that your credit score is, the lower the mortgage refinance interest rate offers that you will receive.
– Research the current value of your home. Check out recent home sales similar to yours in your neighborhood.
– Shop around for the best mortgage rate. Begin by checking online to compare refinance rates. You can do as much shopping online for rates as you would like, but make sure that you limit the time frame for getting a loan application submitted, or letting a lender pull your credit report, to a two-week time period to reduce the impact that it has on your credit score.
– Know what your all-in costs are. A home loan refinance may trigger some fees: tax transfer points and fees, recording fees, title insurance and research, credit report charge, an underwriting fee, a document processing fee, origination fees, appraisal cost and more. Keep in mind that each lender you are considering will provide you with a clear estimate on the mortgage loan fees. Don’t go in blindly and agree to a ‘no-cost refinance.’ That means the upfront fees are being moved by the lender to your loan’s ongoing costs, in the form of either a higher loan balance or higher interest rate.
– Gather your paperwork. These days it can be tougher since so many people do their financial business online. However, you will need to download, print, or gather your pay stubs, statements and anything else that the lender asks for as part of the loan process.
– Lock your rate it. You will need to determine when and whether to lock your mortgage refinance rate in with your lender. That means that the rate that you are offered on a new loan won’t change during the time period specific before closing. It is more of an art than a science.
– Make sure you have cash available. Most likely there will be closing costs, insurance, property taxes and other expenses that will need to be paid at closing, so make sure you set aside enough money to cover these costs. Your loan estimate will list them all out, so there shouldn’t be any surprises. Those costs in some cases can be added onto your mortgage balance. On one hand that will make your upfront costs lower, but on the other hand, will increase the amount that you owe on your house.
If the amount that you ow is more than what your house is worth, you might want to consider a government-sponsored mortgage program for your refinance solution. The programs tend to change names and come and go every so often – but in general, they enable homeowners to refinance their mortgages even when they don’t have a lot of equity in their homes.
Also, on any refinance, make sure you take into consideration how long it is going to take to recoup the expenses and fees.
However, when you refinance with a suitable term, a good rate, and for the right reason, it can help to improve your financial position.
Prodigy Lending is a DBA of AmCap Mortgage, Ltd. (NMLS ID# 129122 – www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/129122), an Equal Housing Lender.
Managing RMLO: Jason Turner (NMLS #286357)