Mortgage Refinancing Rate Calculators

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Q. Is it a good idea to get refinancing?

In certain cases, it`s a financially sound choice to go for a refinance home mortgage. Under other circumstances, it doesn`t make sense. Whether you should refinance your mortgage largely depends on your unique circumstances and your short-term and long-term financial targets. For instance, you might be anxious to lessen your mortgage rate and your monthly installments, but you have to first pose a few questions to yourself (and then answer them):

• For what length of time do you plan on living in your mortgaged residential property?
• What amount of unencumbered interest in do you have in your mortgaged property (that is, your equity)?
• Would you be prepared to pay points (with each point being equivalent to 1% of the face value of the mortgage) in return for a lower rate of interest?
• If you do happen to get to pay lower monthly installments, will this reduction adequately offset the settlement charges -- such as application fees, appraisal fees -- and discount points if any?

Q. Is it a good idea for me to refinance by switching from a variable rate to a fixed rate of interest?

As a general rule, you`d be wise to try getting the smallest non-adjustable rate remortgage loans that you qualify for, but you also have to consider your situation. When you`re in the first year of an adjustable rate mortgage and you plan on moving within 3 years, refinancing probably isn`t the right choice. Yet, in case the rate of interest on your ARM is about to adjust and if you think the rate is bound to climb, in that case it might be a good idea to switch to a long-term fixed-rate mortgage, especially when you plan on staying put over the next seven years or around that timeframe.

Q. Are mortgage rates larger if I go in for a cash-out refinance loan in which the new loan amount is greater than my current loan balance, resulting in cash proceeds?

The rate you pay for a `cash out` refi will typically be about as much as the sum you pay for a home mortgage in which you don`t take cash out. You may have to pay an incremental charge associated with a Cash Out refinance home loans, determined by the specific replacement mortgage you select and the relationship between the amount of your mortgage and the total value of your mortgaged property (called the `loan-to-value ratio`). Exploiting the ownership equity in your home in order to square other bills can be a wise move. Think about liquidating some of your home equity in order to repay high-interest credit card bills, car loans, along with any additional debts you`re carrying where the interest isn`t an allowable deduction. Please consult your tax advisor to check out if there`s any way for you to deduct the interest you will be paying on your replacement loan.

Q. When should I `lock in` my rate of interest?

None of us is in a position to forecast whether rates of interest are going to rise or fall. However, based on historical financial trends, interest rates go up faster than they come down. Given that, if you`re thinking about buying a residential property or a refinance home mortgage for your mortgage loan, freeze your mortgage rate immediately -- you have the option to refinance sometime later if the rates of interest drop in the next few years. In the event that rates do come down anytime soon, they could be too negligible to affect the mortgage installments you pay each month. Understandably, the perspective on this depends on each person`s unique financial and personal circumstances, and it`s consequently important to consider all the choices and options that are available to you.

Q. Is it worthwhile to pay points to benefit from a better rate?

Paying mortgage points may or may not be your best option, depending on your situation. Points paid on a mortgage loan you`ve remortgaged can be taken as tax deductibles only in very modest increments -- 0.33 a year in the case of a 30-year home mortgage, as a case in point. Consequently, it will be many years before your lesser interest rate balances out the mortgage points you buy. However, when you`re buying a home, the mortgage points you purchase are tax-deductible for that specific fiscal period. Do talk things over with your tax advisor.

Q. Can I get a loan without having to pay all those charges for closure?

You`ll find practically no loans that really have no fees at the close of the financial transaction or `closing costs`. Occasionally, mortgage providers might dispense with application fees (the non-refundable fees paid when you apply for your mortgage) and be willing to pay for the mortgage appraisal fee (for a professional opinion on the value of the mortgaged property) with the title fee (for title search or transfer), although they may raise the rate of interest in return. Alternately, creditors may `roll-in` the charges into the principal amount of your loan. When you go with this option, since you don`t have to shell out these these costs before closure, this kind of borrowing is called a `no-closing-cost` loan. While a modest increase in the face amount of your mortgage may may be acceptable to you, bear in mind that this amount isn`t really without interest.

Q. How much time will the process of remortgaging a property take?

Obtaining a refinancing loan typically will require about 2 - 4 weeks, based on certain issues:

• Do you have a recent appraisal?
• Is your home in a place that appraisers can reach without undue trouble?
• Are there lots of other homes, with a similar market value to your residential property, within your vicinity?
• Generally, getting the home appraisal is the stage in the proceedings that takes a lot of time. During loan refinance booms, getting hold of a property evaluator can be quite hard. In addition, having your paperwork ready helps to really speed up the process.

Q. How much money will I need to bring to the closing?

The rule of thumb is that should be prepared to shell out two percent of the cost of the property for prepaid interest in order to take care of the interval between the day you actually get your mortgage and the time you submit your first mortgage monthly installment. A number of US states may also insist on pre-payment of property taxes. When choosing refinance home loans, however, your original home loan is almost certain to have funds in an escrow account (an account set up by a lender to which the borrower makes monthly payments for such obligations as property taxes or homeowners insurance) that will be able to cover such expenses. A number of homeowners take out short-term loans while their escrow funds are re-routed to them, although the majority of borrowers go in for prepaid interest and/or property taxes when the mortgage is finalized, well aware that they`ll get it back when their escrow funds are returned.

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