If your home has a good amount of appreciation in its value, you may be able to refinance your home and take advantage of the benefits that this can offer. However, if you have a reverse mortgage, you may be wondering if you’ll be able to replace your current loan for one that’s better suited to your wants and needs.
Fortunately, it can often be possible to refinance a reverse mortgage – but before you make your decision, it may be a wise idea to find out how much you’d be likely to pay on your new loan.
Reverse mortgage refinance calculators
In most instances, one of the best tools you’ll have at your disposal when it comes to figuring out the rates that could come with your replacement home loan is a mortgage calculator – and luckily for those who want to refinance a reverse mortgage, there are calculators made specifically for these kinds of loans.
How to use a home loan calculator
While most companies will make their calculators as simple to use as possible, there may be times when you’re unsure of what to do. Generally, for almost any kind of mortgage calculator, you’ll be required to provide certain information; both personal, and relating to your property. Generally, they’ll ask for:
- Your date of birth
- Existing reverse mortgage balance
- Your property’s zip code
- An estimation of the home’s value (old and new)
In most cases, if you’re unsure of how much your house is worth, you may want to consider getting an appraisal from an expert. Appraisals can often help you a great deal when refinancing a loan of any kind – and even though they can often cost as much as $400, many find that it can be worth it.
You’ll have quite a few different options to choose from, too. You’ll need to make sure that you pick the right kind of rate for your mortgage (for example, adjustable or fixed rates) and the ideal loan term for your needs. If you’ve been paying off a 30 year mortgage for 10 years, picking a 20 year term on your replacement loan will generally keep the overall duration of your mortgage at 30 years, since refinancing resets the clock on your home loan.
Typically, it’s a wise idea to take your time to compare the different options and pick the one that’s right for you. Make sure to do your research on what’s available to you before this, to ensure you make the right decision.
Why refinance your home loan?
There are so many reasons why refinancing has become popular with homeowners across the U.S – and if you’re considering a refinance, you may already know some of them. However, do you know all of the benefits that can come with replacing your existing mortgage?
Choosing your loan term
First of all, you’ll have to choose how long your new home loan is going to be. If you’d rather reduce your monthly payments and don’t mind paying off your mortgage over a longer period of time, choosing a longer duration might be the ideal option for you.
On the other hand, you could go for a shorter term if you want lower interest rates and to pay off your loan sooner – although your monthly rates are likely to increase, since you’ll be paying off your loan faster.
If you’ve had a particular type of rate all these years and think that now would be a good time to switch, you’re probably on the right track with refinancing. Most individuals choose to go from an adjustable loan to a fixed rate mortgage – but you may also have other options available, too.
If your credit score has improved over time, you could be looking at a lower interest rate on your new home loan, which can reduce the overall cost of your monthly repayments.