When you refinance a mortgage, the lender you’re paying off has to estimate the amount of days of daily interest it will take for them to get paid off in full and for your new loan you’re obtaining to go into place. For example let’s say you’re refinance lender, orders a payoff at the beginning of June, the plan for your refinance is to wrap it up by June 20th, so your current lender will charge you 20 days of daily interest at whatever interest rate you’re presently paying and tack that onto the principal balance reflecting the most recent payment made. This is why payoff demands, or rather the total amount owed is the best barometer to use when factoring in your new loan amount. But how do you know how many days of interest your lender will collect for?
Simple calculation to determine what your total loan payoff amount will be
*Add a mortgage payment to your principal balance. Let’s say your balance on your mortgage is $298,000. Your mortgage payment for example is $2500 per month. Simply add the mortgage payment to the principal balance which would give you a total payoff amount of $300,500. Is this perfect math? No, but these figures are the next best thing to actually receiving the payoff demand when determining how much money is going to be owed if you do refinance your home.
If you’re trying to estimate refinance figures, use our free mortgage calculator which will help show the principal and interest paid overtime. If you’d like a complementary mortgage refinance quote, start today by filling out our easy form.