Mortgage Calculators and Refinancing Your Mortgage

Many years ago when interest rates seemed to be declining almost every day, I attempted to determine the exact point I could benefit from refinancing my home mortgage. At first I search the internet for a mortgage calculator that could aid me in my decision, but to my disappointment I discovered that they all lacked the sophistication necessary to be of much use.

In fact they were so seriously lacking in their complexity that they were nearly financially ineffectual. So after frustratingly realizing I was not going to find what I needed, I decided to build my own mortgage calculators and in 2005 I transferred them to a browser format making them available to the general public. You can try my mortgage calculators at Mortgage Calculators.

Determining the economic benefits of refinancing depends on many factors, i.e. 1) what is the rate on your existing loan, 2) what is the current rate at which you can refinance, 3) what will it cost you to refinance, 4) how long do you expect to hold the property hence hold the loan, and 5) what is the time value of money. My website RealEstate-Calc.com can help guide you through a step by step approach in the application of these variables.

When creating any financial calculator or model there is a trade off between complexity and simplicity versus effectual and ineffectual and striking the right balance is the key to being a good analyst. "Mathematical modeling", "manipulation of numeric data" and "displaying numeric results" are all part of an art form! To think otherwise would produce less than superior results.

Most mortgage calculators leave out the ability for the user to adjust for how long they expect to hold the loan and none that I know of allow the user to adjust for the time value of money. Most do not allow the user to adjust for a mortgage that has already been amortizing for a significant period of time.

How do I do it? I combine 20 years of experience as an analyst on Wall Street with the following skill sets: coding in visual basic, yield curve construction, financial statement preparation, business plan development, complex derivative valuation, and risk management. I am a CPA in the state of New York.

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How much house can I afford?

Buying a home can be a trying task. It is not necessary that the first home you buy has to be your dream home. Nevertheless, it calls for lot of cool headed calculations. There are many factors that are considered. The first thing that you are required to do is find out how much house you can afford. You can use the "how much house can I afford" calculator. Once you are confident with your finances you should take the plunge and buy a house. The mortgage calculators can be of great help if you want to find out your home affordability, interest rates, monthly mortgage payments, loan term, whether opting for FRM will benefit you or opting for ARM will be a better option.

The prevailing mortgage rates are low and if you have enough cash, you can buy a home. Many houses are also facing foreclosure. Reports suggest that Memphis (Tennessee) is a good place for making real estate investment. The real estate market in Memphis has shown a steady rise in employment and the houses that are facing foreclosure are being sold for a dollar range of USD$40,000 to USD$60,000.

The mortgage market has shown signs of revival but the pace is almost negligible. There is however, an air of optimism in the financial markets. The sale of single home units have increased, if not remarkably but comparatively. President Obama introduced the Mortgage Bailout Plan to help homeowners who are facing foreclosure. His Make Home Affordable plan is expected to bailout as many as 4 million to 5 million homeowners.

Mortgage Bailout Plans are usually introduced by the government when the real estate market is in a bad shape and needs a boost to recover. The mortgage bailout program introduced by Obama Administration in February 2009 failed to yield desired results as it addressed the needs of homeowners with primary mortgages. So, only those homeowners who qualified for the program were able to enjoy the benefits of the program.

In order to extend help to homeowners with second mortgages, President Obama introduced an expansion of the Make Home Affordable Plan in which the homeowners with 2nd mortgages will enjoy reduced interest rates and payments. It has been decided that every homeowner will be in a position to pay 1% less towards interest rate payments.

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Reasons Behind Refinancing Mortgage

Mortgage refinancing has become a common practice these days. In the old days, when you get a mortgage, you stay with it until it's all paid out. But nowadays due to interest in real estate, investments and credit cards, consumers are becoming more in debt. Refinancing is a popular option for homeowners trying to stay out of the cycle of debt. Here are some reasons why refinancing could be the answer for you.

1. Lower interest rates. Interest rates can make all the difference to your monthly repayments, especially if you have an adjustable rate mortgage. You are probably ok for the first few years when the interest rates are still fixed. But when the rates start adjusting, your repayments could get out of hand. If you refinance at a time when the interest rates are low, you can lock in that low interest rate. This will make your budgeting easier at the same time you will have some extra cash to spend on other things.

2. Cash payout. You might have credit card debts or a Christmas fund that needs some extra cash. This might not be a small about, and usually you can't get your hands on that much cash without having to take out another loan. However when you refinance, you can get a cash payout equal to the amount that you have paid into the mortgage and the current appraised value of the home. You could get that money and even with a lower interest rate.

3. Shorten your loan term. Most common mortgages for from 20-30 years. If you have a fixed rate loan, your repayments will stay the same for the duration of your loan. The longer your loan is, the more interest you will be paying in the long run. If you have extra money, you should pay off your home loan. Refinancing to a lower term mortgage, say from 30 to 15, will also lower the amount you pay for your interest by almost fifty percent. Also if you've already paid off ten years of your mortgage, refinancing will mean that you will pay off your loan five years earlier.

4. Better credit rating. When you first borrowed money for your mortgage, your credit rating may not be so good. Perhaps you were only able to get an adjustable rate mortgage with a slightly higher interest rate. Five years later your credit rating may have improved. Hence you could now qualify for a fixed rate loan. This way your monthly repayments are more stable, even so you should only switch to fixed rate loan when the market rate is low.

There are many advantages to refinancing your mortgage. The important thing is the shop around and wait for the right moment.

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