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November 2nd, 2010

HSH.com releases first refinance calculator of its kind!

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House on Calc for tri refi So you’re ready to refinance, huh?

Having already made the decision to refinance, your next step is to determine how to best manage the costs associated with the transaction. Mortgage borrowers have asked HSH.com a thousand times, “What’s the best strategy for handling my refinance closing costs?”

-Should I pay the refi costs upfront and out of pocket?

-Should I finance them into my loan amount?

-Should I just trade them for a higher interest rate?

The short answer is “it depends.” There’s no one simple answer, since each choice has its own benefits and total costs that are measured over time. One option may be more or less expensive depending upon how long you plan on holding onto your mortgage. If all avenues are open to you — you have some money saved and you have some equity in your home — then it’s important to determine which refinance strategy will save you the most money over time.

HSH.com’s new Tri-Refi Calculator is designed to do just that. The Tri-Refi Calculator allows you to compare the costs and savings associated with a traditional refinance, a low-cash-out refinance and a no-cost refinance.

Traditional refinance

A traditional refinance allows a borrow to obtain a current-market interest rate for a fee — typically two percent of the loan amount. Borrowers must first financially overcome the closing costs before they can recognize the savings of their lower interest rate. A proper refinance should allow a borrower to recoup their refi costs within two years or less. It’s important to remember that a “traditional” refinance will cost you upfront but will save you money on interest costs over the long term.

Low-cash-out refinance

A low-cash-out refinance is structured so that the closing costs are added into the overall loan amount. You don’t pay the closing costs on your refinance upfront because your lender has added it into what you’ll be paying back in principal and interest over time. This strategy is popular among borrowers who have some equity, but maybe not enough available cash upfront to pay the closing costs. Remember, what it doesn’t cost you now will end up costing you later.

No-cost refinance

A refinance for free? Not exactly. While a no-cost refinance will cost you nothing upfront, the catch is that you trade those costs for a higher-than-market interest rate. Your trade-up rate will be approximately half a percentage point higher than if you went with a traditional refi. Is this your best option? Maybe, but it all depends on your situation. The Tri-Refi Calculator will help you answer that question.

More tools

Aside from comparing the strategies against one another, you can also quickly see how much you’ll save compared to your existing mortgage through multiple sets of charts and tables.

Make the right choice

Knowing which refinance choice saves you the most money is crucial to a successful transaction, and HSH.com’s Tri-Refi Calculator makes this decision quick, precise and easy.

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One Response to “HSH.com releases first refinance calculator of its kind!”

  1. Who Has the Best Online Free Mortgage Refinance Calculator? Says: November 9th, 2010 at 3:08 am

    [...] Refinance Calculator – When I was researching calculators, I also saw that HSH just this month released a new refinance calculator which isn’t ranking in Google’s top 10. It’s [...]

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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