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Refinancing your mortgage can allow you to reduce your monthly mortgage payments, switch to a shorter loan term, or gain access to home equity. This guide will walk you through how to use a mortgage refinance calculator, helping you assess your finances and showing you which type of mortgage loan refinance will save you money.
Key Points
• Using a Tennessee mortgage refinance calculator can help you estimate the costs and savings associated with refinancing, including your break-even point.
• Mortgage refinancing costs in Tennessee typically range from 2% to 5% of the new loan amount.
• A cash-out mortgage refinance allows you to borrow against your home equity to cover large expenses or for debt consolidation.
• Opting for a shorter loan term can increase your monthly payments but substantially reduce the total interest paid over the life of the loan.
• Purchasing discount points can lower your interest rate, but you should use a refinance calculator to determine how long it may take you to recoup the upfront cost through savings.
• A higher credit score can lead to lower interest rates, potentially saving you thousands of dollars.
Tennessee Mortgage Refinance Calculator
Calculator Definitions
strong>• Remaining loan balance: The remaining loan balance is the principal amount you still owe on your home loan, which helps determine how soon you can refinance a mortgage.
• Current/New interest rate: Interest is the percentage of the loan amount charged by the lender. A new interest rate can significantly impact how much you can save over the life of the loan.
• Remaining/New loan term: The remaining loan term is the number of years left on your current mortgage, and the new loan term is the total length of the new loan you’re considering. Shorter loans can save you money in the long term, but they also lead to higher monthly payments.
• Points: Mortgage points are optional upfront fees that you can pay to lower your interest rate. Each point costs about 1% of the loan amount and can reduce your interest rate by 0.25%.
• Other costs and fees: Other costs and fees associated with refinancing your mortgage include origination, appraisal, and attorney fees.
• Monthly payment: Your monthly mortgage payment includes the principal and interest on your home loan. You can use a refi mortgage calculator to compare your current payment to your estimated payment following a refinancing.
• Total interest: Total interest is the cost you pay to the lender over the life of the loan for borrowing money, excluding the principal amount. It can significantly impact your long-term financial planning.
How to Use the Tennessee Mortgage Refinance Calculator
To use the Tennessee mortgage refinance calculator, input your current and proposed loan details. This will help you estimate the impact of refinancing on your monthly payments and interest rate.
Step 1: Enter Your Remaining Loan Balance
Enter your remaining home loan balance into the calculator. This is the principal amount you still owe on your current mortgage.
Step 2: Add Your Current Interest Rate
Next, input your current interest rate. You can find this by either looking at your latest mortgage statement or 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 in your area. A lower rate can reduce your monthly payments and the total interest you pay.
Step 4: Select Your Remaining Loan Term
Input the number of years you have left on your current mortgage into the home refi calculator to calculate the estimated total interest of your current loan.
Step 5: Choose a New Loan Term
Select a new loan term that can help you meet your financial goals. A shorter term can help you save on interest, while a longer term can mean lower monthly payments.
Step 6: Enter Any Points You Intend to Purchase
Enter any discount 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
Estimate any other associated costs and fees, such as application fees, appraisal fees, and attorney fees. Enter these into the refi calculator to see what impact they may have on your potential savings.
Step 8: Review Your Break-Even Point
Calculate your break-even point, the number of months required for any savings you might enjoy on your monthly payment to offset the closing costs. This can help you decide if refinancing would be beneficial for you.
Benefits of Using a Mortgage Refinance Payment Calculator
As housing is likely one of the largest expenses in your monthly budget, using a mortgage refinance calculator can help you evaluate whether refinancing can lower your monthly payment or interest rate by providing a detailed breakdown of how different interest rates and loan terms could affect them. A lower monthly payment can free up cash for other financial goals, while a lower total interest can save you thousands over the life of the loan. For example, a change of just 0.25% in your interest rate could result in significant savings, especially if you can minimize lender fees.
A mortgage refinance calculator can also help you determine how to refinance a mortgage. You can use the calculator to compare costs and savings of different refinancing scenarios, such as refinancing from a 30-year to a 15-year loan, which can help you pay off your mortgage faster and save on total interest. If you have an adjustable-rate mortgage (ARM) and are concerned about future rate increases, a refi calculator can help you compare your current costs to those of a fixed-rate mortgage.
What Is the Break-Even Point in Refinancing?
One of the most important things the mortgage refinance calculator can help you determine is the break-even point. The break-even point is the time it takes to recoup the closing costs on your refinance through monthly savings. To calculate it, subtract your estimated new monthly payment after refinancing from your current mortgage payment, then divide the closing costs by your monthly savings.
For example, if refinancing saves you $100 a month and your closing costs are $2,500, it would take 25 months to cover those costs and start seeing savings. If you plan to sell your home within that time, refinancing may not be the right strategy for you.
Current mortgage rates by state.
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 Tennessee
Refinancing a mortgage in Tennessee incurs costs that are typically 2% to 5% of the new loan, including application fees (up to $500), credit report fees ($25-$75), appraisals ($600-$2,000), recording fees ($25-$250), and attorney fees ($500-$1,000+). Appraisal fees may be waived in some cases. Percentage-based costs typically include loan origination fees (0.5%-1%), title search and insurance (0.5%-1%), and mortgage points (1% per point). Cash-out refinances usually have higher costs due to the larger loan amount.
You can reduce your refinancing costs by comparing lenders’ offers, negotiating fees, and keeping a strong credit score. Some lenders offer a no-closing-cost refinance, but these may come with a higher interest rate. Refinancing a jumbo loan may also involve higher associated costs.
Tips on Reducing Your Mortgage Refinance Payment
There are several ways you can minimize your monthly mortgage payment in the context of a refinance:
• Build up your credit score. A higher credit score can secure you the best interest rates.
• Extend the term of your loan. Refinancing a 15-year mortgage to a 30-year term can lower monthly payments, but it increases the total interest paid.
• Appeal your property tax. If you believe your assessment is too high, contact your local tax assessor’s office to potentially lower your annual tax bill.
• Shop for a lower homeowners insurance rate. Increase your deductible, bundle policies, and make home improvements to lower your homeowners insurance rate.
The Takeaway
Refinancing your mortgage can help you manage your finances and save on monthly payments. A Tennessee mortgage refinance calculator is a tool that can help you estimate costs and savings and determine your break-even point. With this information, you can then assess your credit score and compare loan terms to make the best decision for you. A mortgage refinance calculator can help you lower your monthly payments, access the equity you’ve built in your home, or switch to a different loan type.
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 Tennessee?
On average, refinancing a mortgage in Tennessee involves costs typically ranging from 2% to 5% of the new loan amount. These costs may include lender fees, credit report fees, appraisal fees, title search and insurance, and escrow fees.
How much does it cost to refinance a $400,000 mortgage?
Refinancing a $400,000 mortgage in Tennessee can cost between $8,000 and $20,000, or 2% to 5% of the new loan amount. This covers lender, credit report, appraisal, title search and insurance, and escrow fees.
Do you have to put 20% down to refinance?
Refinancing doesn’t require a 20% down payment, but lenders typically require at least 20% equity in your home. To calculate your equity percentage, subtract the balance owed on your mortgage principal from your home’s estimated value and then divide this by your home’s value.
At what point is it not worth it to refinance?
Refinancing may not be worth it if your break-even point extends beyond how long you plan on staying in the home. For example, if closing costs are $6,000 and monthly savings are $200, it would take 30 months to recoup the costs.
What month is best to refinance?
The best month to refinance depends on current mortgage rates and your personal financial goals. Rates tend to be lower in the fall, but it’s often best to monitor market trends and take your personal financial situation into consideration before sending an application.
Which bank is best for refinancing?
The best bank for you depends on your financial situation and refinancing needs. To choose a lender, compare interest rates, loan terms, and fees from multiple banks; read customer reviews to gauge the lender’s reputation; and see whether you’re eligible for special programs or incentives.
What credit score do you need for refinancing?
A minimum credit score of 620 is typically required for conventional loans. Higher scores, such as 740 and above, can secure you better terms and lower interest rates. Focus on paying your bills on time, reducing credit card balances, and checking your credit reports.
What are the advantages of refinancing your home?
Refinancing can offer several benefits, including securing a lower interest rate, reducing your monthly payments, or allowing you to borrow money against your home equity through a cash-out refinance, provided you still have 20% equity following the transaction. Weigh these benefits against closing costs to determine if refinancing is right for you.
Does refinancing hurt your credit?
Refinancing can temporarily lower your credit score due to a hard inquiry, though this usually has minimal impact on your credit score. Making consistent timely payments to lower your debt levels can mitigate any negative effects and increase your credit score quickly.
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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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