Interest Rate Reduction Refinancing Loan Worksheet is designed to assist homeowners refinance their current loan on substantially reduced interest rates. To qualify for an interest rate reduction refinancing, your current loan must have been paid off on or prior to your current date of purchase. If any portion of your loan has been paid off, you may qualify to have that portion of your loan forgiven. Interest Rate Reduction Refinancing Loan Worksheet is a tool that is used by homeowners to determine the amount of money that can be saved and the time it takes to reduce interest rates on their mortgage. This worksheet is based on a formula that takes your payment amount, interest rate, balance, and payment schedule into consideration. This is the biggest mistake homeowners make when refinancing because they do not take the time to calculate the impact of each change on their total income.
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Most homeowners do not know that lenders use a different type of calculation for pre-qualifying their loan applicants. They commonly use the AM Best Mortgage Rate which is based on the Applicant’s credit rating as determined by the applicant’s payment history. The result is a short-term loan that will offer competitive rates if the applicant can make their monthly payments. If the applicant fails to meet their obligation, the lender then uses the ARM, or Adjustable Rate Mortgages, to calculate the new adjustable mortgage rate. Many times this will result in a higher interest rate than the Applicant’s current mortgage rate.
The Interest Rate Reduction Refinancing Worksheet is designed to help in determining how much of your loan can be refinanced to a lower fixed rate. This is the best way to save money when you refinance your mortgage. The first step in using the worksheet is to determine the current interest rate. This is based on the credit rating and is the starting point for calculating the new fixed rate. You can then determine how much you can save using the ARM and Adjustable Rate Mortgages by simply plugging in your current interest rate.
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Once you have your interest rate and mortgage payment history entered into the worksheet, you simply need to compare the results. There are other factors that can affect your mortgage that can drastically reduce your savings. Things such as your down payment and the amount of term left on your loan can dramatically change the savings. For instance, with a fifteen-year term, a five percent down payment can decrease your savings by forty dollars. Therefore it is important to be sure that you do not get too far into the red when refinancing your mortgage.
One of the key things that you will need to determine early in the process is if you are shopping for only a rate or mortgage payments. It is best to compare both using the same worksheet to determine what your monthly payments would be if you were simply refinancing your mortgage. If you just need a lower rate, use the calculator for a fixed-rate mortgage. This is where you will enter in the loan amount and the term length. The results will provide you a table comparing your results to those of your competitors.
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If you are shopping for a rate, most people get started with a fixed-rate mortgage. However, if you are shopping for a combination of a lower rate and payment, you should look into adjustable-rate Mortgages. These are loans that switching between a fixed and an adjustable interest rate. This type of refinancing can save you a significant amount of money.
Many homeowners are unaware that they can use a second mortgage or home equity loan to finance their home refinance. In fact, many banks offer this type of financial help. These loans are not easy to obtain, but they do offer you an opportunity to save money on the cost of the loan. You will probably have to pay much higher fees than you would with a conventional loan, however.
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Interest rate reduction refinancing is only one of the many ways to save money on the cost of your mortgage. There are many different factors involved when getting a loan. Make sure you shop around and gather as much information as you can. The more you know before you start looking, the better decisions you will make regarding your home mortgage.
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