# Back to Basics: Mortgage and Refinance Calculators

How low rates could affect your refinancing and real estate options depends on a little math.

While mortgage rates continue to stay low, plenty of people are considering taking the first steps toward buying a new home, or refinancing. In each case, low interest rates mean different things for different people.

How low rates could affect your refinancing and real estate options depends on a little math. While you could drag out a pen and paper, you can also just punch a few figures into a mortgage calculator to get a monthly payment estimate.

## Calculating a home purchase

A monthly payment calculator is one version of a mortgage calculator. By putting in the price of the home and the down payment you expect to pay, you can get a rough estimate of a monthly mortgage payment.

If you want a more exact amount, you can also add in property taxes, home insurance and — if the property has them — homeowner’s association (HOA) dues.

For example, a \$300,000 house, with a 20 percent down payment of \$60,000 will have a monthly payment of \$1,151 with a 30-year-fixed rate mortgage, which is currently 4.036 percent.

Adding in taxes and insurance, the home payment will be \$1,517, as seen below:

By playing around with different down payment amounts and types of mortgages, you can get rough estimates of homeowner monthly payments.

## Calculating a refinance

One form of a mortgage calculator, a refinance calculator, doesn’t require a lot of work on your end but can give you enough information to start making the decision about whether to refinance, or not.

Before you use a refinance calculator, get a sense of the competing rates and fees from different lenders. (We suggest using the Zillow Mortgage Marketplace for a good, free comparison.)

Note that there is no such thing as a “no-cost” refinance; either the loan rate will be lower and the fee higher, or vice versa.

The screenshot below shows a possible refinance situation. The homeowner has \$250,000 left to pay and 300 months (25 years) remaining on their mortgage. Their previous interest rate was 6 percent.

With a new interest rate of 3.875, even with fees of \$6,791, the homeowner will save money on their monthly payment by refinancing if they plan on staying in the home longer than 16 months (1.3 years).

Once you find a few appealing mortgage rates and fees, you can plug those numbers in the refinance calculator to see if refinancing is the right decision for you.

## Calculators aren’t the final answer

The final say on whether it is time to buy a home or refinance an existing one should not come from a calculator but depends on your specific financial situation. For more details on a home loan or a refinance, talk to a lender.

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