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Refinancing your mortgage can be a powerful tool to manage your finances effectively. However, it’s important to fully understand both the potential benefits and possible costs involved before making any decisions about your home loan. A mortgage refi calculator can be a great resource during this process. It can help you make a more informed decision by providing estimates for your monthly payments, the total interest you might pay over the life of the loan, and your break-even point — the key to determining whether a refinance will save you money.
Key Points
• A mortgage refinance calculator can help homeowners decide if refinancing is beneficial.
• The refinance calculator helps estimate monthly payments, total interest costs, and the break-even point, which are key to making an informed refinancing decision.
• Even a small reduction in your interest rate, such as 0.50%, 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, while shortening the term can do the opposite, so consider your financial goals carefully.
• Refinancing costs, which range from 2% to 5% of the loan amount, include various fees like origination, appraisal, and attorney fees, and should be factored into your decision-making process.
New Mexico 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 between your current interest rate and a potential new one, even a slight one, can significantly impact both your monthly payments and your overall savings over the duration of the loan.
• Remaining/New loan term: The loan term represents the duration over which you will be expected to repay your mortgage after completing the refinancing process. Opting for a shorter term can save you a significant amount of money in interest payments over the life of the loan, but it 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 associated 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. Keep in mind that lower monthly payments alone don’t indicate whether a refinance will save you money over the long term.
• Total interest: Total interest represents the cost you will pay to the lender over the life of the loan. 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 New Mexico Mortgage Refinance Calculator
To use the New Mexico mortgage refinance calculator, enter your remaining loan balance, current interest rate, estimated new interest rate, new loan term, and any points you intend to purchase. Finally, estimate your other costs and fees to calculate your break-even point.
Step 1: Enter Your Remaining Loan Balance
Start by entering your remaining loan balance into the New Mexico mortgage refinance calculator. This figure represents the principal amount you still owe on your current home loan.
Step 2: Add Your Current Interest Rate
Next, input your current interest rate into the home refi calculator. 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 by inputting the current mortgage rates available in your area. This helps you understand potential savings from refinancing, especially if rates have dropped since you initially purchased your home.
Step 4: Select Your Remaining Loan Term
Input the number of years left on your current mortgage into the refi calculator. 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
Enter any discount points you plan to purchase. Points can lower your interest rate, but they come with an upfront cost. Use the refi mortgage calculator to assess if purchasing points is beneficial for your financial situation.
Step 7: Estimate Your Other Costs and Fees
Estimate other 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. Use the home refi calculator to see how these costs impact your potential savings.
Step 8: Calculate Your Break-Even Point
Calculate your break-even point by dividing the total closing costs by the amount of your monthly savings. If you plan to stay in your home longer than this point, refinancing can be a smart financial move.
Benefits of Using a Mortgage Refinance Payment Calculator
Using a mortgage refinance calculator can help you evaluate whether refinancing is a viable option to lower your monthly payment or interest rate. This tool provides valuable insights 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. Additionally, the refi calculator can help you compare the costs and benefits of refinancing from a 30-year to a 15-year loan, or from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
What Is the Break-Even Point in Refinancing?
The break-even point is a key concept to understand when considering a mortgage refinance. It represents the amount of time required to recoup all closing costs through the resulting monthly savings.
For example, if 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. A refi mortgage calculator can help you determine this break-even point, enabling you to make a well-informed decision about your home financing.
The exception to this rule is a cash-out refinance, where you’re tapping into your home equity rather than looking to save money on interest.
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 New Mexico
Mortgage refinancing isn’t free, and understanding the costs is important. In New Mexico, refinancing a home loan can cost 2% to 5% of the new loan amount. Typical fixed costs include loan application fees (up to $500), credit report fees ($25-$75), home appraisal fees ($600-$2,000), recording fees ($25-$250), and attorney fees ($500-$1,000+).
Percentage-based costs often include loan origination fees (0.5%-1% of the purchase price) and title search and insurance (0.5%-1% of the purchase price). Some fees, like title insurance and inspection fees, may not be required for refinances. Shop around and negotiate with multiple lenders to reduce your costs.
While “no-closing-cost refinance” promotions are eye-catching, they’re a bit misleading, since many lenders will increase your interest rate to cover the cost of closing fees. So they’re not necessarily a good deal.
If your new mortgage refinance payment feels like a financial stretch, there are ways to nudge that figure down.
• Build up your credit score to secure a lower interest rate.
• Extend the term of your loan to lower monthly payments.
• Shop for a lower homeowners insurance rate to decrease your monthly payment.
The Takeaway
Refinancing your home loan can be a strategic financial move, but it’s important to assess the associated costs before making a decision. A mortgage refinance calculator is a valuable and user-friendly tool that helps you estimate key financial metrics such as monthly payments, the total interest paid over the life of the loan, and the break-even point.
Whether you’re looking to lower your current interest rate, switch to a different type of mortgage loan that better suits your needs, or access the equity you’ve built up in your home, the home refi calculator can help you thoroughly understand the overall financial impact and determine if refinancing aligns with your long-term financial goals.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
How much does it cost to refinance your mortgage in New Mexico?
Refinancing a home loan in New Mexico may involve several costs, including origination, credit report, title search, and escrow fees. Some fees, like title insurance and inspection, may not be required for refinances. On average, closing costs can range from 2% to 5% of the total loan amount. Shop around with multiple lenders to find the combination of interest rate and low fees that work for you.
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.
Do you have to put 20% down to refinance?
You don’t need to put 20% down to refinance, but having at least 20% equity in your home can help you avoid private mortgage insurance (PMI) or a mortgage insurance premium (MIP).
At what point is it not worth it to refinance?
Refinancing might not be worth it if you don’t reach the break-even point within a reasonable time frame. The break-even point is the number of months required for the cumulative savings from a lower interest rate to outweigh all associated refinancing costs.
What month is best to refinance?
The best month to refinance can vary based on prevailing mortgage rates and your financial goals. Rates often tend to be lower during the fall and winter months, making these periods more favorable for refinancing.
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 multiple lenders to find the one that provides the most competitive interest rates and favorable repayment terms.
What credit score do you need for refinancing?
To refinance your home loan, you typically need a minimum credit score of 620 for conventional loans. Government-backed loans like FHA, VA, and USDA have different requirements, with FHA loans allowing refinancing with a score as low as 580.
What are the advantages of refinancing your home?
Refinancing your home can offer several advantages, such as securing a lower interest rate, reducing monthly payments, and switching from an adjustable-rate mortgage (ARM) to a fixed-rate loan for increased stability. A cash out refinance also allows you to access your home equity for various purposes.
Does refinancing hurt your credit?
Refinancing can have a temporary impact on your credit score due to a hard credit pull. However, this impact is usually minimal and short-lived. Consistently making timely payments on your new loan can help your credit score recover and potentially improve over time.
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*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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