What are the biggest issues put to use by using this calculator?
The Time Horizon: Normally the case for refinancing is generally linked to how long the consumer is planning to stay in the home. The longer the time period that the consumer plans to stay in the home the stronger the case there is. This is normally because negative impacts to an adjustable rate mortgage can happen over a long period of time.
Features of an Adjustable Rate Mortgage: If you have some great options with your current adjustable rate mortgage it is usually not a very desirable idea to refinance. Some great features that can be offered with an adjustable rate mortgage include low interest rates, long periods of time before adjustments and a low maximum rate.
Features of a Fixed Rate Mortgage Rates associated with an adjustable rate mortgage are generally a bit higher then an adjustable rate mortgage, however the actual total of the difference can actually determine a large amount. There are also several factors that can reduce the benefit of refinancing. This includes items like settlements costs and refinancing fees.
Pre-Payment Penalties: A pre-payment penalty is required on an adjustable rate mortgage if the homeowner refinances. A pre-payment penalty on a fixed rate mortgage is treated just like an additional fee.
Insurance on mortgages: Generally insurance on a home does not need to be required if the house has appreciated at all. Insurance premiums on Fixed Rate Mortgages are normally fairly low if insurance is needed. The reason for this is to be able to offset costs involved with a fixed rate mortgage.
Future Mortgage Interest Rates: Assumed future interest rate patterns can be determined by using calculator 3e. Stable index and worst case are two assumed future interest rate patterns that can be figured out in this manner. Homeowners can actually state a specific interest rate increase that they would like to be able to stick with to get a more accurate predication of interest rates in the future.
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