How to Use a Simple Mortgage Calculator

Using a simple mortgage calculator can help you answer the question “Should I Refinance my Mortgage.” Just because you’re getting the lowest refinance rates from today’s best mortgage lenders doesn’t automatically mean that you’re saving money. Here’s how using a simple mortgage calculator can save you thousands of dollars from unnecessary lender fees and avoid a costly mistake.

Using a Simple Mortgage Calculator

You can use a simple mortgage calculator to learn about your home loan’s amortization schedule. Mortgage amortization describes the process of paying down the balance of your home loan. Mortgage loans are front-loaded with interest, so in the early years of paying down the balance the majority of your payment goes to pay the lender’s finance charges.

Over time this gradually reverses and more of your payment goes to the principal mortgage balance, building equity in your home at a faster rate. Using a simple mortgage calculator to figure out your payment including annual taxes and insurance can show you how much cash you’re saving and what that lower refinance rate is actually costing you.

The first step in using a simple mortgage calculator is to enter your loan balance, refinance rate, and optionally your annual taxes and insurance.

You can enter the values below and click “Calculate Now” to determine your new payment amount.

Simple Mortgage Calculator

Loan Amount: Years: Mortgage Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

Is your monthly payment going down? The difference between your old mortgage payment and the new one that you’ve just calculated including taxes and insurance is your monthly savings.

Should I Refinance My Mortgage?

Now that you’ve figured out if there are any savings to be had refinancing your home loan, you can figure out if paying for a new mortgage is worthwhile. You do this by approximating your break-even point for recouping your total out-of-pocket expenses.

Start by adding up all of the closing costs found on page two of your Good Faith Estimate, including the loan origination fee. You can approximate the amount of time it’ll take you to break even by dividing this total by the amount you’re saving each month.

This is only an approximation because it doesn’t take changes in your term length into account. If you shorten your term length you’ll break even faster. Choosing a longer term length means you’ll never break even thanks to the additional finance charges from those extra years.

Dividing your total closing costs by the amount you’re saving each month tells you the number of months it’s going to take you to break even. If the amount of time is acceptable to you than paying to refinance your home makes sense.

Get a Better Deal Refinancing Your Mortgage

You can reduce your out-of-pocket expenses by shopping smartly for the lowest refinance rates AND fees. Page two of your Good Faith Estimate makes it easy to do this if you go about requesting mortgage quotes the right way.

Before doing anything else it’s important to make sure your finances are in order by reviewing your credit reports for errors. Fair Credit laws require credit bureaus to give you free access to the information in your credit reports once per year. You can get your free credit reports by visiting the government mandated website AnnualCreditReport.com.

Once you’ve reviewed the contents of your credit reports if you find errors you can dispute the incorrect information online with each credit bureau. Be sure and allow enough time for corrections to be reflected in your credit score before requesting refinancing quotes.

How to Shop for the Lowest Refinance Rates

Are you hesitant to give a lender your Social Security number when shopping for refinance rates? It’s true that your credit score will take a hit when lenders pull your credit but that’s the only way to get an accurate quote when shopping for refinance rates. The trick is to limit all of your lender credit inquiries to a two week period and you’ll only get dinged once.

Next, make sure that the quotes you request are zero point quotes. You’ll find that many lenders quote refinance rates that include discount points first to make their interest rates seem more attractive.

Discount points are a fee you pay to buy down your mortgage rate. With refinance rates at historically low levels most homeowners won’t gain anything by paying this fee.

If you’d like to see how paying discount points affects your monthly payment there is a table on page three of your Good Faith Estimate; however, you should start your comparison shopping with zero discount point refinance quotes.

Start comparison shopping from a variety of banks, credit unions, lenders and brokers. You’ll find that the fees on page two of your good faith estimate, like the origination fee, vary widely from one type of lender to the next.

The less you pay at closing, the faster you’ll break even recouping your out-of-pocket expenses and the sooner you’ll benefit from your lower mortgage rates.

Pay close attention to that loan origination fee found on page two of your good faith estimate. Many loan officers will tell you that one percent is standard; however, I’ve reviewed several community based credit unions that charge as little as \$400 for their loan origination fee.

You can learn more about paying less for your next home loan with today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

• Get My Underground Mortgage Videos
Here’s a quick sample to help you avoid lender junk fees by shopping smartly…

Free Refinancing Information

If you’re searching the Internet for free refinancing information you probably already know that there’s a lot of bad mortgage advice on the web. Everyone with a website is a self-proclaimed mortgage refinancing expert claiming that they have the lowest rates and fees. The problem is that many people, including almost all of your neighbors, wouldn’t know a good mortgage deal if it came and sat in their lap. First of all, I’m not here today to sell you a mortgage loan; the free refinancing information on this site will show you how to recognize a good mortgage deal when you find one. Here are my best mortgage refinancing tips to help you get a great deal when refinancing your home loan without paying unnecessary markup or junk fees.

Free Refinancing Information Online

There are tons of mortgage refinancing resources available on the Internet and an equal amount of bad mortgage advice. One of the more famous and equally bone-headed tidbits of bad advice you’ll encounter is the so called two percent rule of mortgage refinancing. People still quote the two percent rule when asking if it makes sense to refinance their mortgage loans. Simply put the two percent rule of mortgage refinancing states that you should not refinance your home loan unless your new mortgage rate is at least two percent lower than the mortgage rate you’ll get from refinancing.

Compare Mortgage Refinance Rates

Rather than relying on this old chestnut of bad mortgage advice it makes more sense to evaluate your decision to refinance based on how much it will cost you and how long it will take to recoup your expenses. Keep in mind that not everyone refinances their homes to get a lower payment. If you’re the market to consolidate bills or borrow cash against your home equity you could wind up with a higher mortgage rate and payment than you have now; however, it could still make good sense to refinance in your situation. If you’re in market for a new home loan with a lower mortgage rate and payment you’ll want to weigh your options based on the cost/savings of a new mortgage loan.

Every mortgage loan has closing costs that you’ll have to pay…and some more than others. These closing costs include fees charged by the underwriter, origination fees charged by the broker, various administrative fees and any unnecessary junk fees you unknowingly agree to pay. (Check out the free mortgage videos available on this website to find out more about avoiding these unnecessary junk fees) You can easily calculate how long it will take you to recoup your closing costs on the new mortgage by dividing your total expenses from refinancing by how much lower your new mortgage payment will be. This will tell you the number of months it will take to recoup your closing costs from refinancing…if the timeframe is acceptable to you then it makes sense to refinance the mortgage in your situation.

How to Avoid Mortgage Junk Fees & Unnecessary Markup

There are a number of ways your neighbors overpay for their mortgage loans. The most common is also the least known…a fee paid to your loan originator known as Yield Spread Premium. The person arranging your home loan is called the loan originator and mortgage lenders pay this person the fee known as Yield Spread Premium for locking and closing your home loan with a higher than necessary mortgage rate. This unnecessary markup of your mortgage rate results in a higher than necessary mortgage rate and according to the Secretary of Housing and Urban Development will result in homeowners in the United States overpaying over sixteen billion dollars this year alone.

There are a number of other mortgage junk fees your neighbors agreed to pay that are also the reason they pay too much for their mortgage loans. These junk fees include paying too much for the mortgage broker origination fee as well as agreeing to other junk fees like mortgage rate lock fees, broker courier fees, and excessive loan processing and administrative fees.

You can find out how to avoid all of these junk fees including the unnecessary markup of your mortgage rate for a commission by checking out the free refinancing information in my Underground Mortgage Videos.

Here’s a sample of what you’ll get when you register today. These mortgage refinancing videos are yours free with nothing to buy later on and no obligation.

How Are Mortgage Rates Determined?

Are you considering a new mortgage loan for your home but want an answer to the question how are mortgage rates determined before refinancing? It might surprise you to find out that mortgage rates have less to do with your credit score and more to do with how greedy the person arranging your home loan is; however, it’s true. Here’s what nearly every mortgage broker in the business hopes you don’t know about your question “how are mortgage rates determined…”

How Are Mortgage Rates Determined Anyhow?

Assuming you have the minimum credit score necessary to qualify for a traditional mortgage loan and meet the loan requirements as far as equity the mortgage rate you get has nothing to do with your credit and everything to do with the person arranging your loan. Your mortgage rate is also determined by the type of mortgage loan originator that you choose. The loan originator is the person arranging your loan: it could be a mortgage company, mortgage banker, or a mortgage broker. Different loan originators are compensated for your home loan in different ways.

Choose a bank to refinance your home loan and you’ll get a mortgage rate that’s been marked up to create a profit for the bank in the form of Service Release Premium. Banks make the majority of their profits from home loans that they close with higher than market mortgage rates when the loans are sold to investors on the secondary market. This “extra” profit is called Service Release Premium and is similar to the Yield Spread Premium that other mortgage companies and brokers collect from lenders when they close home loans with higher than necessary rates.

What kind of mortgage rate should you shop for when refinancing your home? What you want is a wholesale mortgage rate which in the business is called a “par” mortgage rate. Par mortgage rates are simply mortgage rates that you don’t have to pay points to qualify for and do not create Service Release Premium or Yield Spread Premium for whoever arranges your loan. Getting a par mortgage rate for your home isn’t as difficult as you might think…you don’t have to be a financial “guru”…you just have to find the right person to arrange your next home loan.

Understanding Mortgage Rate Sheets

Your mortgage broker probably won’t give you an honest answer to the question “How Are Mortgage Rates Determined” nor will they show the mortgage rate sheets they’re quoting you from. The reason for this is because the rate sheets they get from wholesale lenders quote that lender’s rates with varying degrees of Yield Spread Premium. The broker quotes you a mortgage rate based on what they think you’ll be willing to overpay for the mortgage loan. Sound like a used car salesman? That’s really all most mortgage brokers are…used car salesman taking advantage of their customers with Yield Spread Premium.

How does Yield Spread Premium work? For every .25% that you agree to overpay for your home loan the wholesale lender pays your mortgage broker 1% of your loan amount. This is paid on top of the origination fee and any junk fees you agree to pay. Not coincidentally, nearly all of the junk fees you find in mortgage offers today come from the mortgage broker, not the lender. Our friend the used car salesman rears his ugly head once again as a mortgage broker. How can you avoid Yield Spread Premium when refinancing your home loan and walk away with a par mortgage rate?

You can do this by finding the right mortgage broker for the job. Banks and credit unions simply do not give par mortgage rates to their customers and most mortgage companies are simply unable or unwilling to give you a par mortgage rate. You’ve got to work with a mortgage broker if you want the lowest possible mortgage rate. Finding the right mortgage broker for the job isn’t hard either. Look for small-time, self employed mortgage brokers. Find one that works out of their home? Even better.

These small-time mortgage brokers don’t have the expensive overhead or ridiculous company hummers and will be much more likely to negotiate the kind of deal you’re looking for that doesn’t include Yield Spread Premium.

You can learn more about answering the question how are mortgage rates determined for yourself without paying unnecessary fees by checking out my free Underground Mortgage Refinancing Videos.

Here’s a sample you need to know about this unnecessary markup of your mortgage rate for kickback from the lender known as Yield Spread Premium. Register for these mortgage videos today while this is still a free offer.

Beware Free Credit Report Dot Scam

If you’re thinking about mortgage refinancing the first thing you should do before all else is check your credit reports. Don’t waste money buying credit reports or signing up for one of those credit monitoring services just to get a “free credit report.” Here are several tips to help you check out your credit prior to refinancing without wasting any of your hard earned cash.

Credit Reports Are Free…Period

Legislation in the United States known as the Fair and Accurate Credit Transactions Act passed in 2003 was intended to help you protect your credit and help prevent identity theft. This law requires the three credit reporting agencies that maintain your credit reports to provide you one free copy of your credit report every year. There are no fees or services to try…this is not to say the credit agencies won’t try and up sell you with a credit score ; however, you really don’t to pay for that either.

Free Credit Report dot what? It seems the Federal Trade Commission has grown a sense of humor. Remember those annoying “Free Credit Report” commercials on TV? Check out the FTC’s spoof of one misleading website’s commercials:

All you need to get a truly free credit report from Equifax, Experian, and TransUnion is to visit the website AnnualCreditReport.com The website is secure and sports the latest encryption; however, if you don’t feel comfortable entering all of your personally identifiable information including your social security number into a website you can get the same reports sent to you by calling 1-877-322-8228 or mailing a written request to:

Annual Credit Request Service
P. O. Box 105281
Atlanta, GA 30348-5281

It’s important to review your credit reports (make sure you check all three) every year in order to catch mistakes or identity theft should you become a victim. Mistakes in your credit report can result in higher interest rates or fees such as security deposits unnecessarily. Millions of Americans in the United States become the victim of identity theft every year. In fact, your chances of becoming a victim are statistically one in twenty.

Before you think about applying for a home loan or refinancing your existing mortgage go over all three credit reports with a fine-tooth comb. If you find mistakes in your credit reports each credit agency has a procedure for disputing errors. Correcting errors in your credit reports is free by the way…don’t let someone con you into purchasing their magical credit repair “kit.” More information about identity theft and protecting yourself is available free of charge on the FTC website at ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357).

Mortgage Help for Homeowners

Are you considering mortgage refinancing this year? Worried about paying too much or taking out the wrong type of loan when refinancing?

It’s true that mortgage refinancing can save you thousands of dollars by lowering your monthly payment amount; however, there are a number of pitfalls that result in paying too much for your new home loan.

There is mortgage help for homeowners that will allow you to refinance without paying markup of your interest rate or junk fees to the broker or lender. Here are several tips to get you on the right track to saving thousands of dollars on your next mortgage loan.

Mortgage Help for Homeowners

If you’re refinancing your home mortgage loan there are several ways to overpay when taking out the new loan. Most of the junk fees and markup you will encounter come from the person arranging your mortgage and can be avoided if you find the right person to work with. Who is the right person to refinance your home mortgage loan? I’ll get to that in a minute but first I’ll tell you who it’s not…your bank or credit union. Many people think taking out a mortgage with your bank is the most convenient way of refinancing; while it’s true banks make it easy to take out a mortgage you are guaranteed to overpay with any bank or credit union and here’s why:

Real Estate Settlement Procedures Act

There is a bit of legislation in the United States called the Real Estate Settlement Procedures Act that protects homeowners from abusive lending practices by requiring mortgage brokers to disclose their markup and profit margins on your home loan. Sounds great right? There’s just one problem with fair lending laws in the United States, your bank and credit union are exempt from them when it comes to mortgage loans. That’s right; the Banking Lobby spent millions of dollars romancing Congress to be exempt from this legislation and succeeded in getting the laws changed so that your bank is exempt from RESPA legislation.

Because of this loophole in the Real Estate Settlement Procedures Act your bank or credit union is not required to tell you how much they’ve marked up your mortgage rate or how much profit they’re making off your home loan. If you refinance your mortgage with your bank you will pay too much…period.

Mortgage Broker Tricks

Now that you know banks are a bad idea for refinancing your home mortgage loan I should tell you that mortgage brokers aren’t much better as a whole. This doesn’t mean that you can’t find honest brokers to work with it just means you have to stay on your toes when shopping for the right broker to refinance your mortgage. Mortgage brokers are not exempt from RESPA legislation like your bank; however, they do have clever ways of disguising their markup and junk fees. Learn how to recognize mortgage broker tricks and you’ll be able to find an honest mortgage broker and save yourself thousands of dollars on your next home loan.

Mortgage Rate Markup

So what is this markup of your mortgage rate anyhow? Simply put your broker marks up your mortgage rate because the lender pays them a commission for locking and closing your loan with a higher than necessary mortgage rate. This fee is known as Yield Spread Premium and according to the government is responsible for homeowners in the United States overpaying sixteen billion dollars this year alone. How do you recognize Yield Spread Premium when refinancing your home mortgage loan? You won’t typically find it listed on your Good Faith Estimate because this document is little more than a marketing tool used to sell loans.