What is a Refinancing Calculator?
A refinancing calculator is an online tool that helps consumers plan the refinancing of a mortgage or other loan. These tools help the consumer by telling them the different amounts that they might want to refinance. This helps the consumer to know all the costs involved in refinancing their loans so that they will not be surprised at closing.
People usually use the refinancing calculators to refinance their homes and other property. This helps them to properly calculate all the costs involved in refinancing. One such calculator, or kalkulator, is easy to use and anyone can use it. This calculator does everything you need it to do to figure the cost of your refinancing.
Best Reasons to Refinance Your Home
There are many reasons to refinance your home, and most of those reasons are that it will help save you some money in at least one way. If it does not save you any money, it is probably best not to refinance. Listed below are some of the reasons that refinancing your home is a good idea.
- Lower Interest Rate
One of the biggest reasons that people refinance their homes is to get a lower interest rate. A lower interest rate will save you on your monthly payments. The bad side of refinancing for a lower interest rate is that you will start all over on your payments. To avoid paying more in the long run, you can refinance your home for a shorter time period.
- Your Borrowing Profile Has Changed
Sometimes after you have been paying on your mortgage long enough, your borrowing profile can change. This can happen when you have paid enough of your debt down to get a lower FICO credit score, or when your home value changes drastically. When this happens, it can lower the interest rates on a new mortgage loan and can end up saving you some money.
- Change Your Loan Product
Sometimes you might have difficulty getting a loan for your first mortgage and you must settle for an FHA loan or something similar. With an FHA loan you must pay MIP costs and if you refinance, these costs can go away saving you money each month.
- Reduce the Loan Term
If you reduce the loan term, you can have your home paid of in fifteen years instead of thirty years. This might make a higher monthly payment, but you will save in interest fees by paying your loan off early. A lot of times, these shorter loan times also come with lower interest rates, saving you even more money.
- Increase the Loan Term
Sometimes people want to extend their loan times because they need to save on the monthly payments. This will cost more in the long term because of interest rates, but in the short term you can save a little money every month. Some people will put the money that they save into long term investment like stocks and bonds.
- Switch to Fixed-Rate Loan
Sometimes to get a better loan, people will settle for an adjustable-rate mortgage that means their interest can go up and down with the market. If they have done that, their circumstances may have changed, and they now want a fixed-rate mortgage. They can also do this if they know that interest rates will go significantly higher.
- Switch to Adjustable-Rate Loan
It might be less expensive for you to move from a fixed-rate loan to an adjustable-rate loan for a few reasons. One reason is that you started with a high interest loan when you first got your mortgage, and rates are lower now. Some people will move from one adjustable-rate loan to another for the same reason – the interest rates have gone down significantly.
- Go Fully Amortized
If someone has had an interest only loan and the interest rates are changing drastically, they might want to switch to a fully amortized loan. Interest only loans usually only last for ten years and the person might want to go to a fully amortized loan for that reason. To find out what it means to be fully amortized, see this site here: https://www.investopedia.com/terms/f/fully_amortizing_payment.asp. It can explain that and more for you.
- Go to Interest Only
Other people may want to go from a fully amortized loan to an interest only loan if they have lots of equity built up in the home. This helps lower the payments and frees some money up for other investments.
- Get Cash from Your Home
People may refinance simply to get cash from their homes, especially if they have a lot of equity built up in their home. Refinancing at that point can leave them with some extra cash that they can use for almost anything else they wish to use it on.
- Buy Someone Out
People may have others on the mortgage loan that they no longer want on there. It might be because their parent’s names were on the original loan or because of a divorce. They can refinance and have those names removed, while also possibly saving money on interest.
- Consolidate Other Mortgages
Another reason people may want to refinance is to consolidate other mortgages. Sometimes there are at least two mortgages on a home and the people want to refinance to combine those mortgages into one. This will save them some money in the long run.
- Consolidate Other Debt
Refinancing your home and cashing out on some equity is a great way to consolidate other debts into one loan, saving money and only having one bill to pay. This is one of the most common reasons to refinance.
There are many reasons that people may want to refinance their homes, this is just a few of those reasons.