January 31, 2013
If you are unable to manage with the payments, then you may opt for mortgage refinancing. Refinancing a mortgage enables homeowners to shorten the loan term period or obtain a low rate of interest. With reduced interest rate, the monthly payments will get decreased. The total financing cost will also get reduced. As such, you should shop around for the right mortgage refinancing rates and loan term period when you’re thinking to refinance your home.
5 Steps to calculate mortgage refinance rate
If your financial condition is poor, it is quite obvious that you won’t be able to make the loan payments on time. Read on to know about the 5 steps to calculate mortgage refinancing rates.
1. Find out the amount you owe on the loan – If you want to go for mortgage refinancing, the first thing you should do is to find out the amount you owe on the loan. You can check out this on the first part of your mortgage loan statement. However, if you find it difficult to understand how much amount you owe, you may get in touch with your lender.
2. Know the right mortgage term period – While refinancing, you may select a term period according to your suitability. This may range from 15 to 45 years. You’ll have to pay high financing costs along with the loan term period. If you want, you may choose short term period that you can afford in order to repay your loan. In this case, the monthly payments will be high, but with low rate of interest, you’ll be able to make the payments easily.
3. Assess your credit score – You should assess your credit score from before hand before you may opt for mortgage refinancing. You need to know that the financial institutions use risk-based lending to the customers. Thus, the better your credit score may be, the lower interest rate you’ll be able to get on your mortgage loan. You can obtain your credit score at Annual Credit Report. By knowing your credit score, you’ll be able to get help in finding the proper rate of interest for mortgage refinance calculations.
4. Shop around for the best interest rate – In order to obtain reasonable interest rate on your loan, you’ll have to shop around for the best interest rate. There are various online rate shopping tools that will help you find low mortgage refinancing rates. You may sort the results by considering your credit score in order to refine the interest rate further.
5. Work out refinance payments – There are several calculators available online with which you can calculate the necessary calculations on your own. Make sure you use a calculator from an authentic website so that you can get the accurate result of your refinance payments. To use the calculator, you’ll have to enter the total loan amount, rate of interest, term period to compute the total payment. After you enter all the necessary information, the calculator will provide you the monthly payment on your loan.
These are the essential steps that will help you calculate the mortgage refinance rate.