HSH.com, a publisher of mortgage and consumer loan information, has launched two unique calculators for homeowners who are unable to refinance at today’s low interest rates, but who want to achieve a similar savings. By calculating an appropriate additional payment to their monthly mortgage, these two calculators, LowerRate and PreFi, will help borrowers achieve savings as if they had refinanced to today’s rates.
"If you can't refinance your mortgage but can afford to pay some additional money each month, that prepayment might save you as much as an actual refinance," said Keith Gumbinger, vice president of HSH.com. "It's technical, but by prepaying the loan principal just a little each month, borrowers lower their effective interest rate and can create savings equivalent to those possible with an actual refinance."
With these new tools, HSH hopes to introduce homeowners to the concept of a ‘prepayment refinance.' HSH.com’s PreFi calculator will tell borrowers with a specific dollar amount available to devote to mortgage prepayment exactly how much they will save and the effective interest rate they will achieve.
The PreFi calculator is a perfect tool for homeowners with older loans with only a few years of payments left; small-balance loans; homeowners who refinanced already but want to achieve rock-bottom interest rate savings; and homeowners who cannot refinance due to today's stiffer underwriting standards.
"The PreFi calculator allows users to input the additional amount they can send in each month with their regular mortgage payment and it will report the effective interest rate a borrower can achieve with that extra payment, their total interest savings and more," notes Gumbinger.
The LowerRate prepayment calculator was designed for borrowers who want to achieve a specific, lower interest rate than their current mortgage rate.
"Let’s say a borrower refinanced their mortgage down to 4 percent early last year. Rates have since fallen to 3.5 percent, but a half-point break is too small to want to incur all the costs and hassle of refinancing again. Plug the 3.5 percent into the LowerRate calculator to find out exactly how much additional money they’ll need to pay each month to achieve that lower interest rate as if they did refinance!" said Gumbinger.