Can I Refinance My Mortgage and How Big of a Payment Can I Afford?

Refinancing your mortgage is a great way to get rid of high interest credit card payments and even pull some cash out for home repair or a needed vacation. But just because you have equity in your home does not mean you can necessarily afford a new mortgage payment. So before you head to the local mortgage company and say, i want to refinance my mortgage do a few simple calculations and see what you can actually afford.

How Much Mortgage Can You Afford?

Mortgage lenders already have this one figured out for you and it is all in their lending guidelines. These guidelines are a set of pre determined parameters that the lenders feel help them accurately gauge a borrowers ability to pay the loan back.

The most critical of these guidelines is the ratio of you bills to your income. This ratio is called the debt to income ratio or DTI for short! Many lenders would prefer to see a DTI around 45%. But under some circumstances it can go as high as 50% and still be approved. Once it goes over 50% many lenders will deny the loan do to risk levels and the increased possibility of loan default.

Your Personal DTI is easily figured out by taking your monthly minimum credit account payments and dividing your gross pre tax monthly income into the amount. To keep it simple you can have roughly .45 cents of debt for every $1 you make in monthly income. So if you make $2000 you can have $900 in monthly debt payments.

Keep in mind that the debt to income ratio only takes into account things like credit cards, mortgage payments, car payments and other credit accounts. It does not take into account daily living expenses or luxury items like cable TV or cell phones so make sure to leave yourself money to live on after the house payment has been made.

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Home Refinancing - When is it a Good Idea?

When you need cash

Home refinancing is a great idea when you need to get your hands on a great deal of available cash for any of several reasons. Essentially, what you are doing is trading the equity in your house for cash in hand that you can use in any way you want. The equity may have accrued because you have been paying on a mortgage long enough to pay down the principal so there is a difference between the value of the house and the amount you owe. Refinancing obligates you to paying more money or borrowing for a longer term, but may be the best option if you need immediate cash in large amounts.

When you want to pay off some debts

Debts can be financially debilitating, whether they are secured or unsecured obligations. If you are constantly worrying about having enough income to pay the monthly obligations that you have incurred, home refinancing may be an option you would like to consider. You trade the equity of your home for cash which you use to pay off some of the smaller and higher interest debts that cause so much outgo from your earnings each pay period. Your mortgage will usually cost you less than the expensive minimum balances on the credit card or other debts.

When you want to reduce the payment of high interest fees

A home refinancing loan is often used to reduce the outgo caused by paying high interest rates on credit card debt and other smaller loans. Just like paying off other debts with the proceeds of your refinance, the reduction of credit card debt can make a huge difference in your financial picture. You will pay far less in interest payments with an equity based loan than with credit card debt and part of your interest may be tax deductible.

When you want to lower monthly loan payments

When you have paid down the principal on a mature loan and want to reduce the monthly outgo from your budget, you can do a home refinancing that will reduce the cost of the monthly payment. Because you are creating a new loan for the new equity amount, you are also changing the other terms. You can reduce the term and still pay slightly less each month if the new interest rates are lower than in the original mortgage loan. Some homeowners with mature mortgages are paying far less than rent costs would be by using the concept of refinancing the reduced principal.

When you are simplifying your life

If you have reached a stage in life where you want to relax and take more time to just enjoy life, you may also want to reduce some of the life stressors. If you use home refinancing as a tool to reduce your payment levels, it also has the advantage of removing some of your financial stress. Lower monthly payments sent to the mortgage loan company means you can afford many more enjoyable things in your life.

When you are trying to decide if home refinancing is a good option for you, checking the resources available at Home Refinancing or Home Loan Refinance is an excellent tactic. The more information you have, the more likelihood of making a good decision.

The Mortgage Rate Calculator - Don't Overlook Its Power to Save You Tens of Thousands of Dollars

Generally speaking, we have no control over what interest rates will be. Government policy and the general state of the economy including the inflation rate will dictate the range of interest rates that will be available.

Still, when we go for a mortgage there are things in our credit history that can determine whether we will get a higher or lower interest rate than that of the normal market. Some of the things that determine whether or not we will get a favorable mortgage rate are:

. Our credit rating

. The length or term of the mortgage

. Timing (What the going rate is when we apply)

. How intensely we shop around, and

. Points paid at closing

The power of getting the best rate

While some of these things are determined mostly by how lucky we are, there are certain ways to save tens of thousands of dollars on your mortgage. Take the following example: You have found your bank will loan you $200,000 at the rate of 6% over a period of 360 payments, which is 30 years. With a mortgage calculator, it is determined the monthly payment for this loan will be $1,199.10. Also, it can be calculated over the course of this loan, you will have paid a total of $431,676.00 in principal and interest.

Another possible scenario is the same bank gives you an option to take a mortgage of $200,000 for a term of 240 payments, or 20 years at 5.5%. Here, a monthly mortgage calculator calculates the monthly payment to be $1,375.77. This means over the course of the 20-year mortgage you will have paid a total in principal and interest of $330,189.80.

Calculate your way to savings

You can easily see by taking the 20-year mortgage instead of the 30-year mortgage, you will have saved $100,000. Still, you decide paying $1,375.77 will not fit into your monthly budget. So, you continue your search for the right mortgage.

Another lender offers you a 30-year mortgage on a $200,000 principal. However, this lender will give you an interest rate of 5.5 % instead of the 6% you would have paid on the other 30-year mortgage. Going to the calculator, you'll find your monthly payment to be $1,135.50. Paying this mortgage in full for the 30-year term will cost $408,808.80.

So the difference between this 30-year loan and the other 30-year loan is a little more than $23,000. The only thing you did was look a little harder to find the right mortgage.

Paying a little more each month

Let's go one step further. You decide the first 30-year mortgage's monthly payment, $1,199.10, was an amount you could easily pay. So, you decide to pay this amount each month on the 5.5% mortgage. By doing this, you will have the mortgage paid in 26 years instead of 30. This will result in a savings of close to $30,000 over what you would have paid if you just made the $1,135.50 monthly payment.

Even more interesting is the fact you have already saved $23,000 because you've taken the lower rate. So, by taking the lower rate and paying the higher monthly payment, you will have saved a total of $53,000!

The calculator arms you with important knowledge

Without understanding and making use of the power of a mortgage calculator, a person normally ends up paying top dollar. However, with the combination of knowing just how much money is at stake and being a frugal shopper, tens of thousands of dollars can be saved.

In these examples, we used a mortgage calculator that calculates for monthly mortgage payments. Also, we used a calculator that determines the total amount paid over the full term of a mortgage. There is, however, an interest rate calculator that figures the interest rate when given the principal of the mortgage, the term of the mortgage and the monthly payment that will be made.

This is an important type of calculator to be familiar with because when you know how much money you need to borrow and how large of a monthly payment you qualify for, you can determine the mortgage rate you'll need to get.

Let's take this example: in order for a family to buy a new house they will need to be able to borrow $200,000. A 30-year term is all right for them and they have qualified to make a payment of $1,250 each month. By using an interest rate calculator, it is determined that they need to find a mortgage whose rates is no more than 6.392%.

With this knowledge, the potential borrowers have a predetermination of exactly what mortgage they will need to find. In this case, there's no doubt they'll find the right mortgage and will not be talked into taking one over their heads. This is another one of the powerful, money saving uses of a mortgage calculator.

Mortgage Refinance Online

If you wish to refinance your mortgage, also called remortgaging, you can mortgage refinance online. There is no need to ring many different lenders in order to obtain the best remortgage deal. You need only go online to find the best mortgage option available for you.

There are many different reasons people choose to refinance their mortgages. These reasons range from a desire to get lower mortgage payments, to draw money from their equity to use for home improvements or to consolidate debt, to gain flexibility, or to change from a variable rate to a fixed rate.

To get the lowest mortgage payment you can mortgage re finance online. Here you can see which option is right for you. If you want the lowest monthly payment possible, choose an interest only mortgage with a variable rate. An interest only mortgage requires you to pay only the interest, instead of capital and interest one pays for a repayment mortgage. A variable rate is generally lower than a fixed rate, but the rate does not stay the same for the entire period of the loan. If you are planning on getting additional money in the future, either by getting a different job or inheriting money, an interest only variable rate mortgage is a good refinance option.

If you want to consolidate debt or get cash to pay for home improvements, you can apply for a mortgage refinance online that offers you a cash back option, or equity release. The equity in your home is determined by the value of your property less the amount you owe. Many people do not even realise that their home has increased substantially in value since their purchase. With an equity release remortgage you can receive a certain percentage of equity back to use however you choose.

To gain flexibility, you can get a mortgage that offers you the option of holiday payments. Holiday payments mean that you can go for a period of time without making payments. This is especially helpful to those who have jobs that pay hourly and do not pay if someone goes on holiday or becomes ill for a brief period of time. Other flexible mortgages offer the borrower a chance to pay extra towards the capital without incurring a fee.

With mortgage rates at an all time low in the United Kingdom, many people with variable rates are choosing to refinance to obtain a steady fixed rate. A fixed rate mortgage maintains the same interest rate during the term of the loan. No matter what your needs or circumstances, there is a refinance option designed to make certain that you get what you need. Even those with CCJs or poor credit are able to refinance at a competitive rate.

To mortgage refinance online, visit Finance Tracker. Here you can learn all about the different rates available today, as well as the different terms offered, all within the comfort of your own home. It is very simple to mortgage refinance online and is very convenient. Whatever your circumstances, there is a refinance option available to help you.

Use the Finance Tracker service and apply for a mortgage refinance online at competitive rates. Finance Tracker will find you a mortgage from the whole of market. They specialise in refinance mortgage cases for home owners.