Updated: March 27, 2014
I’m currently on a 2-day “mission” in Legazpi City, Albay.
I’ll tell you what I did here when I get back in Manila by the weekend, but for now, let me share with you an article contribution from a friend.
It’s all about how to figure out and compare mortgage rates easily by using online calculators.
If you do online banking, I’m sure you’ve noticed these tools and probably played around or tinkered with them.
This article will show you how to properly evaluate, if that calculator is giving you reliable computations, or are just out to generate leads for their business.
I hope you find value in this article, and I promise to write about my short trip here in Bicol in a few days.
The topic of mortgage rates can be something people like to avoid, unless they have a problem with their current rate.
Not only can it be confusing – but talking about how much you pay for your home is a personal matter and not something to be discussed with friends and family over dinner.
If you’re curious about the new possible mortgage rates and how they can help or if they even benefit you at all, using an online mortgage refinance calculator can be the best place for you to start.
You can use this resource without committing to a new policy, agent, or even going through the hassle of a sales pitch. You may be surprised to learn about the options within your grasp by using this simple tool
Calculators and their Rates
Not all mortgage rate calculators are the same and it’s no surprise that some are designed to trick consumers into giving out personal information or other pertinent information for the wrong reasons.
If you are skeptical of the information the site is requesting, move on to another calculator and keep working the numbers. Not every online mortgage refinancing calculator is a scam and finding one with the right information can change your outlook on mortgage rates.
Even if your interest is lowered by one point, you will save money and when you stay in that house for a long period of time, the effort and time it takes to refinance will be well worth it.
In some situations, you may be moving and the cost to refinance will not outweigh the potential long-term savings. For the savings to be realized in most refinancing plans, time has to pass as it can be costly to go through the refinance process.
Elements of the Mortgage Calculator
Take the time to use an online calculator to decide if a new rate is the best option for you right now, in your current situation. Most of these calculators take into consideration your current balance, today’s rates, the term for a new loan, closing costs, and if you will be financing those closing costs.
A legitimate mortgage calculator will have the following items for you to input:
- Principal Mortgage Balance
- Current Monthly Mortgage Amount
- Current Interest Rate on your Mortgage
- New Interest Rate for a new loan/refinanced loan
- Term of New Refinance Loan
- Closing Costs- a number of points or dollar amount
- Yes/No to answer if you are going to finance the closing costs
- Preferred contact method (optional)
If a site requires a login or credit card in order to use the mortgage calculator, this is a site you probably don’t want to use. In fact, it could be a fake site and they just try to get your information.
Be wary of sites like this as there should never be a fee or cost to get a free mortgage calculator rate. Keep in mind if you get a rate, it is just a quote and the mortgage companies will need more information from you in order to proceed with the contractual agreements.
Deciphering the Results
After you put in the information to a rate calculator, you will probably see a variety of options for a refinance or a first mortgage. The ability to compare and decide on an option is what you want to see more than anything else.
You don’t want to be directed to a lender’s site or to not see the comparisons. What you’ll get with the right mortgage calculator is your down payment, monthly payments, break-even point, and total loan costs versus what you’re currently paying.
Detailed numbers are crucial to your decision making process and without them, you can’t make an informed decision.
Inputting your Existing Rates
An added benefit of using a mortgage refinance calculator is that you can see how much you can save by paying off your principle earlier or shortening your loan term.
You can do this from the comfort of your own home and it won’t require you to fill out any paperwork or use your credit to apply for a better rate.
The online calculators can provide that necessary motivation to make those extra monthly payments or to forego a vacation in order to shave off final costs on your mortgage. After all, when the house is paid off, you will own it free and clear.
The feeling of owning the house and land free and clear, is something most people only dream of but with some quick online calculations, you can figure out what it will take to get you to that goal.
If your best option is to refinance, using the online mortgage refinance calculator can give you the necessary information and the tools to do it. It may cost money up front, but in many situations, you can finance that initial loan, pay it off quickly, and be well on your way to greater savings each month.
This article is written by Joseph Harrison, a bank loan manager in the U.S.