How To Do An Effective Mortgage Calculation

Lee and Ann have lived in their home for 10 years and they signed up for a 30-year fixed rate mortgage. They want to do a mortgage calculation to see if they can refinance their house at a lower interest rate. Before they sign on the dotted line, they have to consider a few factors. Lee and Ann have to know what the balance of their current loan is and how many months it would take to pay it off. Let’s suppose they took out a $200,000 mortgage at 5% interest and they have $140,000 left on the original loan. If Lee and Ann found a mortgage for 4.75% for 20 years and decided they wanted their closing costs included with the loan, they would save about $40,000 in interest. They would have to consider whether they have the money for a down payment on the new mortgage, as well as closing costs and fees.