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Refinancing your mortgage can be a strategic way to save on monthly payments, adjust loan terms, or access home equity. A California mortgage refinance calculator helps you assess the financial impact of refinancing by providing estimates of potential savings and costs. Use this guide to learn how to use a California mortgage refinance calculator so you can make an informed decision about whether to trade your old loan for a new one.
Key Points
• A California mortgage refinance calculator helps homeowners estimate monthly payments, total interest costs, and the break-even point, which are key in making a decision to refinance.
• Extending the term of your loan can lower monthly payments but increase total interest paid, while shortening the term can do the opposite, so consider your financial goals carefully.
• The break-even point, calculated using a refinance calculator, helps determine if the savings from refinancing outweigh the initial costs within a reasonable time frame.
• Improving your credit score can enhance your refinancing options and help you secure better interest rates, potentially saving you thousands of dollars over the life of the loan.
California Mortgage Refinance Calculator
Calculator Definitions
• Remaining loan balance: The remaining loan balance represents the principal amount you still owe on your home loan.
• Current/New interest rate: Interest is the percentage of the total loan amount that the lender charges the borrower for the privilege of borrowing money. The difference, even slight, between your current interest rate and a potential new one can significantly impact both your monthly payments and your overall savings over the duration of the loan.
• Loan term: The loan term is the length of time you have to repay your refinanced mortgage. Opting for a shorter term can reduce your total interest costs, but a longer term offers lower monthly payments. Use the calculator to see the potential impact of various terms on your payments and overall savings.
• Points: Mortgage points allow you to prepay a portion of the interest due on a home loan at closing. Each point typically costs 1% of the total loan amount and can reduce your interest rate by 0.25%. Consider the long-term savings when deciding to purchase points.
• Other costs and fees: Refinancing your mortgage comes with various costs, including origination fees, appraisal fees, attorney fees, and closing costs. These expenses typically range from 2% to 5% of the new loan amount.
• Monthly payment: Your monthly mortgage payment typically includes both principal and interest. A refinance mortgage calculator can help you compare your current monthly payment with the estimated payment after refinancing to potentially secure better terms. Lower monthly payments alone don’t indicate whether a mortgage refinance will save you money over the long term.
• Total interest: Total interest, which you pay the lender over the life of the loan, is the cost of borrowing money. Comparing the total interest payments associated with your current mortgage to the projected total interest of a potential refinance loan is an important step in determining if the new loan will save you money over the long term.
How to Use the California Mortgage Refinance Calculator
To use the California mortgage refinance calculator, gather your current loan details and proposed refinance terms so you can estimate your potential savings and costs.
Step 1: Enter Your Remaining Loan Balance
Enter your remaining home loan balance. This figure represents the principal amount you owe on your current home loan.
Step 2: Add Your Current Interest Rate
Input your current interest rate — found on your latest mortgage statement or by contacting your lender.
Step 3: Estimate Your New Interest Rate
Estimate what your new interest rate would be by comparing offers from different lenders or checking online for current mortgage rates. A lower rate can reduce your monthly payments and total interest paid.
Step 4: Select Your Remaining Loan Term
Key in the number of years left on your current mortgage. This estimates the total interest you’d pay if you kept your current mortgage.
Step 5: Choose a New Loan Term
Select a new loan term, anywhere from 10 to 30 years. A shorter term can save on interest, while a longer term can lower monthly payments.
Step 6: Enter Any Points You Intend to Purchase
Input any points you plan to purchase. Each point costs 1% of the loan amount and lowers your interest rate by 0.25%.
Step 7: Estimate Your Other Costs and Fees
Input other costs and fees, including application fees, appraisal fees, and attorney fees to see their impact on your potential savings.
Step 8: Calculate Your Break-Even Point
Divide the total closing costs by the amount of your monthly savings to determine your break-even point. Use this information to decide if refinancing is beneficial.
Benefits of Using a Mortgage Refinance Payment Calculator
Using a refinance calculator can help you evaluate whether refinancing is possible and beneficial. This tool provides a detailed comparison of your current and potential new mortgage, showing how different interest rates and loan terms could affect your monthly payment and total interest paid. Even a small reduction in your interest rate, such as a quarter percentage point, can result in significant savings, especially for larger home loans.
The calculator can also help you determine how to refinance a mortgage. It will help you consider the purpose of your refinance, whether it’s to lower your interest rate, switch to a different type of mortgage loan (such as a fixed-rate loan), or access home equity with a cash-out refinance.
What Is the Break-Even Point in Refinancing?
The break-even point is a key concept that helps you determine if the savings from refinancing outweighs the initial costs within a reasonable time frame. To figure out the break-even point yourself, subtract your estimated monthly payment after a refinance from your current mortgage payment. Then divide the total closing costs by the amount you are saving each month.
For example, let’s say refinancing saves you $100 each month and the total closing costs amount to $5,000, then it would take 50 months to break even — to cover those upfront costs and start seeing actual savings. If you plan to sell your home before reaching the break-even point, then refinancing might not be the right option. The calculator will compute your break-even point for you.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
Typical Closing Costs for a Refinance in California
Because there are costs and fees associated with refinancing a mortgage, you should have a good understanding of all of the potential expenses. Mortgage refinancing costs in California are typically 2% to 5% of the loan. Fixed costs include application fees (up to $500), credit reports ($25-$75), appraisals ($600-$2,000), recording fees ($25-$250), and attorney fees ($500-$1,000+). Percentage-based costs include origination fees (0.5%-1%), title search/insurance (0.5%-1%), and points.
Some fees, like title insurance and inspection fees, may not be required for refinances. Shop around and negotiate with a variety of lenders to reduce your costs. Some lenders offer a no-closing-cost refinance but these may come with a higher interest rate.
You might be wondering how you can lower your new mortgage refinance payment. Here are some tips:
• Improve your credit score before refinancing to land a lower interest rate.
• Comparison shop for offers from a variety of lenders to find the best rates and terms.
• Consider extending the term of your loan (this could increase your total interest paid however).
• Shop for a lower homeowners insurance rate to decrease your monthly payment.
The Takeaway
Refinancing your mortgage can be a great financial strategy, one that requires careful consideration. Use a mortgage refinance calculator to estimate potential savings, both monthly and over the life of the loan. Examine your results, including the break-even point, to help you decide if going through the refinancing process aligns with your financial goals.
SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.
A mortgage refinance could be a game changer for your finances.
How much does it cost to refinance your mortgage in California?
Refinancing in California involves closing costs ranging from 2% to 5% of the new loan amount. These costs may include application fees, credit report fees, appraisal fees, and title insurance. Shop around and compare rates from many lenders to minimize expenses.
What month is best to refinance?
The best month to refinance can vary based on prevailing mortgage rates and your financial goals. Historically, rates tend to be lower during the fall and winter months. Your best move is to monitor current rates and ensure you’re financially stable before applying.
Do you have to put 20% down to refinance?
You aren’t required to put down 20% to refinance. However, having at least 20% equity in your home can help you avoid private mortgage insurance (PMI).
Which bank is best for refinancing?
Choosing the best bank for refinancing depends on your specific financial needs and the rates and terms they offer. Compare offers from different lenders to find the one that provides the most competitive interest rates, favorable repayment terms, and best customer service for your needs.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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