California Mortgage Refinance Calculator

MORTGAGE refinance is basically a new loan to repay an existing
mortgage using the same house as collateral for the new loan. Mortgage
refinance is preferred when interest rates fall below the rate at which
the original loan was taken, so that the borrower can take advantage of
the lower rate.

Since property prices in California are among the
highest in the United States, it makes tremendous sense to consider
mortgage refinance in this state (this however does not take away from
the case for mortgage refinance in the other states too). Calculating
mortgage refinance is not for the lay person. It requires knowledge of
the financial market, foresight on how interest rates will move in the
coming months, government policies that can influence the economy, and
so on. It is not possible for everyone to master this subject overnight;
so the best recourse is to use online mortgage refinance
calculators.This calculator asks you the following questions, which you
must answer correctly

PART 1 : Current mortgage

1. What monthly payment you are making on your current mortgage.
2. What is your current interest rate.
3. How many years and months are left on your current mortgage.
4. How much do you plan to refinance.
5. How many years you plan to remain in this house.

PART 2 : Refinance options

In
this part, you are given three options, named ‘Loan 1’, ‘Loan 2’, and
‘Loan 3’. You don’t have to enter information for each Loan option, but
is better if you do so because that will enable you to compare the
refinance options you have. For each loan option, you have to answer the
following communications:

1. Interest rate that you want.
2. Term of the loan you want (i.e., how many years).

3. Points (i.e., costs that need to be paid to a lender in order to
receive mortgage financing under the specified terms. A point is a
percentage of the loan amount (one point = one percent of the loan). One
point on a $100,000 loan would be $1,000. You may enter 2, 1, or 0).
4. Other costs that you will incur (e.g., legal and bank fees, appraisal costs, taxes, etc.).

PART 3 : Results

Once
you have entered the above details under each of the Loan options,
press the ‘Compare Loans” button. The screen will now change; scroll
down the table you see (it contains all the information you entered in
the above two parts) to the part named ‘Results’. The Results will be
divided into the following items for each Loan option for which you
provided details in Part 2 above. The results will tell you the
following :

1. Your upfront cost for the refinance.
2. The monthly payment you have to make.
3. Monthly savings vs current loan.
4. Break-even point in terms of years and months.
5. Total loan costs vs current loan.

Note
that the calculator described in this article is not the only one you
can use; there are several similar refinance calculators.

What next

Remember
that calculators provide you only with approximations and that the
actual terms may be slightly higher or lower. Different calculators may
ask for slightly different sets of information, but they all let you
know whether it makes sense to go for a mortgage refinance or continue
with the existing mortgage. Don’t assume that refinance is always a good
proposition; so online calculators are always a good starting point.