How To Use Refinance Mortgage Calculators

For many individuals, refinancing a mortgage is something that only occurs a few times within a lifetime.  Securing a new mortgage can be an intimidating task; but with some basic research using a refinance mortgage calculator, one can approach a lender with confidence.

You can easily find refinance mortgage calculators on the web.  A search for a “free amortization calculator” yields more than enough results. The calculators may vary slightly regarding features, but the basic information requested will not.  Most of the information you will need should be available on your most recent mortgage statement.

First, you will need to enter the loan amount.  Enter the unpaid principal balance on your current mortgage.  If you happen to have some equity available in your home, and would like to borrow additional money from that equity, add the amount you would like to borrow to your loan amount.  

Next, you will need to enter an annual interest rate.  If you know your credit score, it should be simple to find what rate you might be eligible for by doing an internet search for current mortgage interest rates.  Then, enter the term of the loan.  Be careful to note whether the calculator requests the term of the loan in years or months.

With this basic information, you should be able to determine the monthly principal and interest payment.  In addition, you will most likely be able to view either a monthly or yearly amortization schedule for the duration of the loan.  This schedule will show you how much of your payment is going toward principal, and how much toward interest, at different times during the repayment period.

Of course, if payments toward property taxes and homeowner’s insurance are included into the monthly mortgage payments to be placed in an escrow account, you will want to consider that as well.  Some refinance mortgage calculators will estimate these amounts for you; others allow you to enter the specific amounts.  The latter is preferable, as taxes and insurance can vary widely in different parts of the country.

One additional feature that some mortgage calculators offer is the option of entering the frequency of the payment.  Most calculators operate under the assumption that the mortgage will be paid once every month, but biweekly mortgage payments are not uncommon.  Also, you may be able to enter a specific date for the first mortgage payment - this will also yield specific monthly or yearly information regarding the payoff of the mortgage.


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