Mortgage Refi Calculator – KOAM

Mortgage Refi Calculator - KOAM
Written by Publishing Team

With mortgage rates dropping to new record lows by more than a dozen times, millions of people have already refinanced their mortgages and millions more can save by doing so.

Use Money’s refinancing calculator to determine if refinancing is right for you.

It gives you the best

The best is to redefine the home ownership process. Experience a simple process to get a mortgage online without commissions, fees for lenders and 24/7 support.

How does the money refinance calculator work

Our refinancing calculator can help you find out how much you can save by refinancing. Just enter the details about your current mortgage and new home loan.

Before you start shopping for a lender, we recommend that you review our research on the best mortgage lenders for 2022 to find the best rates for your location, credit score, loan amount and type.

Money Refinance Calculator

What is a mortgage refinance?

Mortgage refinancing is done when you take out another mortgage to pay your current mortgage balance. Ideally, this new loan will have a lower or lower interest rate or both, resulting in significant long-term savings.

How does refinancing work?

Refinancing is an option for people who want to pay off their mortgage payments in a shorter period of time, lower their current monthly payments, or cash in on their home equity.

Home equity is calculated by dividing the home’s value by what you currently owe on your mortgage.

To refinance a mortgage, you must go through the application and eligibility process, just like when you took out your original loan. After the loan is approved, you’ll pay off your old loan and keep making monthly payments on your new mortgage for the term.

What is the cost of refinancing?

According to Freddie Mac, the average closing costs for a mortgage refinance are around $5,000. But keep in mind that closing costs vary depending on the loan amount and the state in which the property is located.

Here are the standard costs included in the closing disclosure for your refinancing loan:

  • Evaluation fee: A professional appraiser looks at the property and estimates its market value
  • lawyer’s charge: A lawyer prepares documents and contracts – not all states require the services of a lawyer
  • Warranty fee: Fee paid to the real estate agency or attorney responsible for closing the loan
  • Insurance Fee: Homeowners insurance must be valid
  • points: Also known as discount points, they are used during closing to lower the loan interest rate – each point equals 1% of the loan amount, their purchase is optional
  • Subscription fee: Covers the cost of evaluating the loan application
  • Tax service fee: Fee to ensure that borrowers pay the required property taxes

When should you refinance your mortgage?

It’s not always a good idea to refinance your existing home, but it can be a wise financial move under the right circumstances.

Mortgage refinancing makes sense if you can achieve one of the following:

Low interest rate

To secure a new lower interest rate that can lead to:

  • Less monthly payment
  • Pay less during the mortgage term

To qualify for the lowest possible refinance rates, you will generally need to have a credit score of at least 740.

Shorter loan term

Spreading your loan balance over a shorter loan term will:

  • Help you pay off your mortgage faster
  • Pay less interest over the life of the loan

Annual percentage rates are also generally lower for 15-year loans than for 30-year loans. This option is best for those who have few long-term financial commitments and can afford their monthly mortgage payments.

Get the cash you need now

For cash refinancing loans:

  • Most banks will require you to keep at least 20% of your equity in the house
  • High credit score requirements

Interest rates on cash refinancing loans tend to be higher as well. Most borrowers choose this type of refinancing to cover home renovation expenses or to consolidate debt.

Get rid of mortgage insurance payments

For conventional loans, your private mortgage insurance (PMI) should be automatically unlocked once you reach 80% of your home’s equity. However, with an FHA loan, you are required to pay Mortgage Insurance (MIP) premiums for the life of the loan.

If you have enough capital and can qualify, he can pay to refinance a conventional loan. The FHA mortgage insurance premium ranges from 0.45% to 1.05% of the loan amount each year.

Switch to a fixed rate mortgage from an adjustable rate mortgage

With a fixed rate mortgage, the interest rate and monthly mortgage payments will remain the same for the life of the loan (that is, until you sell, refinance, or run out of payments). Because of this predictability, fixed rate mortgages are the best option for most borrowers – especially when rates are low and if they plan to stay in their homes for a long time.

Refinancing can help you save money on mortgage payments.

With interest rates dropping to record levels, refinancing can save you money by helping you secure a lower interest rate. Click below for a quote.

Refinance your loan today

When is mortgage refinancing a bad idea?

Refinancing your existing loan may not make sense in every scenario. If the cost of a new loan will exceed the amount you’ll save by refinancing, if your financial situation is uncertain, or if your credit score drops, refinancing may not be the smartest option.

Other reasons that may not be the best option when refinancing include:

If you are planning to move soon

If you plan to sell in the next few years, your monthly savings by refinancing may not exceed the total cost of refinancing your loan.

To figure out the breakeven point for your new loan, add up your closing costs, which can include appraisal fees, title fees, credit report, and origination fees—about 1% of the loan amount—and divide them by the amount you want. Savings every month with a new payment.

According to Freddie Mac, the average closing costs on a mortgage refinance are about $5,000. If you plan on staying home for less time than it would take to recover what you would have spent on closing costs, refinancing may not be a good deal.

If your credit score drops

When you apply for a refinancing loan, lenders determine your credit eligibility in part by looking at your credit score. The higher your credit score, the better your chances of getting a low rate.

If your credit score is lower than it was when you bought your home, you may not qualify for a lower rate. If your score is low enough, you may want to work on improving your credit before refinancing.

How do I qualify for a mortgage refinance?

When applying for a new mortgage or refinance loan, three main factors will affect your rates:

  • Debt to Income Ratio
  • Balance level
  • Loan to Value Ratio

Although credit score requirements vary by lender and loan type, a higher score will always mean a better rate. If you feel that your credit needs improvement, there are ways to gradually improve your score, such as checking your report for errors and correcting them.

Check out all three free copies of your annual credit reports from

Ultimately, the best way to improve your score is to develop good long-term credit habits, such as paying your bills on time and keeping track of your credit utilization rate. Being patient is important because improving your credit score will take time.

© Copyright 2021 Ad Practitioners, LLC. All rights reserved.

This article originally appeared on and may contain affiliate links for which Money is compensated. The opinions expressed in this article are those of the author alone, not those of a third party, and have not been reviewed, approved, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Money’s full disclaimer.

About the author

Publishing Team

Leave a Comment