How to calculate potential savings with streamline refinance
First, let's start with some background information on streamline refinancing. Streamline refinancing is a process where you refinance your mortgage to get a lower interest rate and better terms. The key benefit of this type of refinance is that it's streamlined, which means there's less paperwork and less hassle involved. As a result, it's faster and easier than a traditional refinance.
Now, let's get back to calculating your potential savings.
Step One: Determine Your Current Mortgage Payment
The first step in calculating your potential savings is to determine your current mortgage payment. You can usually find this information on your mortgage statement, but if you don't have it, you can contact your lender to get the details. Once you have this information, you'll use it to compare it to your new mortgage payment after refinancing.
Step Two: Determine Your New Interest Rate
The next step is to determine your new interest rate. This rate should be lower than your current interest rate. You can get an idea of what your new interest rate might be by looking at current mortgage rates online or speaking with your lender. It's important to note that your new interest rate will depend on a number of factors, including your credit score, the loan amount, and the loan term.
Step Three: Determine Your New Monthly Payment
Once you have your new interest rate, you can use an online mortgage calculator to determine your new monthly payment. You'll need to input the loan amount, loan term, and interest rate to get an accurate estimate of your new monthly payment. Make sure to use a calculator that takes into account any additional fees, such as closing costs.
Step Four: Calculate Your Savings
To calculate your savings, subtract your new monthly payment from your current monthly payment. This will give you the amount you'll save each month by refinancing. For example, if your current mortgage payment is $1,500 and your new monthly payment after refinancing is $1,300, you'll save $200 per month.
Step Five: Determine Your Break-Even Point
The break-even point is the point in time when your monthly savings from refinancing will outweigh any costs associated with refinancing, such as closing costs. To calculate your break-even point, divide your total refinancing costs by your monthly savings. For example, if your refinancing costs are $3,000 and your monthly savings are $200, your break-even point will be 15 months.
Step Six: Consider Your Long-Term Savings
Finally, it's important to consider your long-term savings when refinancing. While you may save money each month, you'll also want to look at the total amount you'll save over the life of your loan. You can use an online mortgage calculator to get a better idea of your long-term savings.
In conclusion, calculating your potential savings with streamline refinancing is an important step in deciding whether or not to refinance your mortgage. By following these steps and using online tools to help you, you can make an informed decision and potentially save thousands of dollars in the long run.