Tutorial #Q6-7: Refinancing a Loan
Intro: If you have considered refinancing a loan and wonder exactly how much you will save and how long it will take you to recoup the costs of refinancing, Quicken has just the tool to help you with your calculations. The Refinance Calculator is designed for mortgages, but you can adapt it to help you consider refinancing any type of loan.
Step 1: View Quicken's Calculators
Open the Planning menu and choose Financial Calculators. An assortment of financial calculating options will appear.
Step 2: Open the Refinance Calculator
Choose Refinance from the list of available calculators.
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Step 3: Enter Current Information
In the Existing Mortgage section of the Refinance Calculator, enter the current monthly payment that you make, then enter the amount of that payment that represents something other than principal and interest. Quicken will calculate the amount of your payment that represents only principal and interest.
Step 4: Enter Proposed Option
In the Proposed Mortgage section of the Refinance Calculator, enter the amount you expect to borrow when you refinance, the number of years over which you will pay off the new loan, and the interest rate.
Quicken will calculate the amount of principal and interest you will pay each month, and the monthly savings when compared to your current loan.
Step 5: Enter Closing Costs
In the Break Even Analysis section of the Refinance Calculator, enter the amount of any costs associated with refinancing your loan, including appraisal, title fee, legal fees, and so on. On the second line of this section enter the amount of points you will pay, if any, on refinancing.
Quicken will calculate the total amount of closing costs you will pay, and will determine how many months it will take you to pay off those closing costs, based on the monthly savings you acquire through refinancing.
Step 6: Print Your Calculations
Click on the Print button in the Refinance Calculator window to print a copy of these calculations. Click OK in the Print window to print this information. Click Done to close the Refinance Calculator.
This refinance information is not saved in Quicken. If you choose to refinance your loan, you will need to set up the new, refinanced loan in Quicken (see Create a Liability Account earlier in this set of tutorials). You will also want to remove the old loan from your Quicken records (see Deleting a Loan).