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When you take the step to refinance your mortgage, it’s important to fully understand both the potential benefits and possible costs involved before making any decisions about your home loan. A Kentucky mortgage refi calculator can be a great resource during this process. The tool helps provide estimates for your monthly payments, shows you the total interest you might pay over the life of the loan, and calculates the break-even point, an important figure that lets you know when the savings from refinancing will outweigh the initial costs.
Key Points
• The refinance calculator helps estimate monthly payments, total interest costs, and the break-even point, all key elements to making an informed refinancing decision.
• Even a small reduction in your interest rate can lead to substantial savings over the life of the loan, making refinancing a potentially advantageous move.
• Extending the term of your loan can lower monthly payments but increase total interest paid. Shortening the term can do the opposite, so consider your financial goals carefully.
• Factor in refinancing costs, like origination, appraisal, and attorney fees, which can range from 2% to 5% of the loan amount.
Kentucky Mortgage Refinance Calculator
Calculator Definitions
• Remaining loan balance: The remaining loan balance is what you owe on your existing mortgage. This affects how soon you can refinance a mortgage, as you usually need to have at least 20% equity in your home.
• Current/New interest rate: Interest is the percentage of the total loan amount that the lender charges you for the privilege of borrowing. The difference between your current interest rate and a potential new rate, even a small amount, can significantly impact both your monthly payments and your overall savings over the duration of the loan.
• Remaining/New loan term: The remaining loan term represents the duration you are expected to repay your mortgage after completing the refinancing process. A shorter term can save you a significant amount of money in interest payments over the life of the loan, but will also lead to an increase in your monthly payments.
• Points: Mortgage points, also known as discount 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%.
• Other costs and fees: Refinancing your mortgage comes with various costs and fees, including those for the lender, credit report, home appraisal, and attorney. Mortgage refinancing costs typically range from 2% to 5% of the total loan amount being refinanced.
• Monthly payment: Your monthly mortgage payment typically covers the principal and interest. A refi mortgage calculator can help you compare your current monthly payment with the estimated payment after refinancing to potentially secure better terms.
• Total interest: Total interest represents the cost you will pay to the lender over the life of the loan. Compare the total interest paid before refinance with the projected total interest on a mortgage refinance to determine your potential savings.
How to Use the Kentucky Mortgage Refinance Calculator
Here’s how to use the Kentucky mortgage refinance calculator effectively.
Step 1: Enter Your Remaining Loan Balance
Enter your remaining 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. This helps estimate your current monthly payment and total interest costs, which can be compared with potential new rates and terms. Your interest rate depends on market conditions, your credit history, and the type of mortgage loan you choose.
Step 3: Estimate Your New Interest Rate
Estimate your new interest rate based on current mortgage rates offered by lenders. Enter this rate into the refinance calculator to see how it could affect your monthly payments and total interest.
Step 4: Select Your Remaining Loan Term
Enter the number of years that remain 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
Choose a new loan term that aligns with your financial goals. A longer term can lower monthly payments, while a shorter term can reduce total interest paid over the life of the loan.
Step 6: Enter Any Points You Intend to Purchase
Select the number of discount points, if any, you plan to purchase. Points can lower your interest rate, but they come with an upfront cost.
Step 7: Estimate Your Other Costs and Fees
Input the amount of other potential costs and fees, such as origination, credit report, home appraisal, and attorney fees. These costs can range from 2% to 5% of the loan amount.
Step 8: Review Your Break-Even Point
The calculator divides the total closing costs by the amount of your monthly savings to determine your break-even point. This figure helps you assess whether refinancing is worth pursuing. If you plan to stay in your home longer than this point, refinancing can be beneficial.
Benefits of Using a Mortgage Refinance Payment Calculator
You will see that using our Kentucky mortgage refinance payment calculator has many benefits. It can help you evaluate whether refinancing is a viable option to lower your monthly payment or interest rate. The tool provides insight into potential savings, allowing you to see if refinancing could free up money for other financial goals. Even a small reduction in your interest rate, such as a quarter percentage point, can result in significant savings, especially for larger home loans.
Lastly, the refi calculator can 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 represents the amount of time required to recoup all closing costs through the resulting monthly savings. Having a good understanding of the figure helps you decide whether a mortgage refinance is right for you.
The refi mortgage calculator shows your break-even point — by subtracting your new estimated monthly payment from your current mortgage payment, then dividing the closing costs by the monthly savings.
Let’s say refinancing saves you $100 each month, and the total closing costs amount to $2,500. It would take 25 months to cover those upfront costs and begin seeing actual savings. If you plan to sell your home before reaching this point, refinancing might not be the best option.
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 Kentucky
Refinancing a home loan in Kentucky can cost anywhere between 2% to 5% of the new loan amount. There are a variety of fixed costs such as loan application fees (up to $500), credit report fees ($25-$75), home appraisal fees ($600-$2,000), recording fees ($25-$250), and don’t forget attorney fees ($500-$1,000+). Take into account percentage-based costs too, such as loan origination fees (0.5%-1% of the purchase price) and title search and insurance (0.5%-1% of the purchase price).
Another avenue some people consider is a no-closing-cost refinance, which allows borrowers to roll the closing costs into the mortgage in exchange for a higher interest rate. This move may allow you to keep cash on hand to use for other purposes, however it will increase the principal and total interest paid so you’d have to consider whether it’s worth doing.
Here are strategies to help you reduce your mortgage refinance payment:
• Work on improving your credit score to secure a lower interest rate.
• Shop around with different lenders and negotiate to get competitive rates and terms.
• Look into extending the term of your loan to reduce monthly payments (this will likely increase your total interest paid).
• Homeowners insurance premiums are often included in mortgage payments, so shop for a lower homeowners insurance rate by increasing your deductible or bundling policies.
The Takeaway
Refinancing your home loan can be a strategic financial move, but it’s important to assess the costs before making a decision. Use our Kentucky mortgage refinance calculator to help you estimate potential savings, both monthly and over the life of the loan, and determine whether refinancing aligns with your long-term 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 a $300,000 mortgage?
Refinancing a $300,000 home loan comes with costs that can range from 2% to 5% of the loan amount, translating to approximately $6,000 to $15,000. Common fixed costs include loan application, credit report, and attorney fees. A mortgage refinance calculator can help you estimate your break-even point and assess the financial viability of refinancing.
What credit score do you need for refinancing?
A credit score of at least 620 is typically required for conventional loans, and a higher score, such as 700 or above, can help you secure more competitive interest rates and terms. Monitor your credit report, and see what you can do to improve it.
Does refinancing hurt your credit?
Because refinancing triggers a hard credit pull, it can have a temporary impact on your credit score. The impact is usually temporary, and if you manage the new loan responsibly making on-time payments, your credit score can recover.
At what point is it not worth it to refinance?
To help you determine if it’s not worth refinancing, calculate your break-even point. This is the number of months required for the cumulative savings from a lower interest rate to outweigh all associated refinancing costs. For example, if it will take 50 months to recoup refinancing costs, and you plan to move within 30 months, refinancing may not offer financial benefits.
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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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