Online Calculator Answers 'Should I Refinance?' With a Yes or No

Mortgage calculators online are getting smarterAs the economy wavers and mortgage rates inch lower, an increasing number of homeowners are questioning whether or not they should refinance. Even those who locked in lower rates a year or two ago are debating a second go-round. But thanks to a new online refinance calculator, consumers don't have to look any further than the Internet for the answer.

Flooded by e-mail inquiries from consumers looking for refinancing advice, the website Bills.com recently launched a tool that figures out whether refinancing is a prudent option, based on a user's unique situation and homeownership goals.

"People just look at interest rates, they don't know what to look at," says Ethan Ewing, president of Bills.com. "Based on your situation, the calculator gives you a clear 'yes' or 'no' answer."

The way it works is: Consumers input information about their mortgage and home, including their current loan balance and interest rate, as well as their location and home value, and then they select their goals, such as reducing monthly payments, locking in a low fixed-rate or building equity.

If you're a prime candidate to refinance, the calculator churns up real-time feeds that offer homeowners loan rates and closing costs from the site's network of lenders. Results also reveal how much you can save in payments and interest through a refinance.

Search Homes for Sale Browse through photos of millions of home listings or search foreclosure listings But not everyone agrees that the answer to the refinancing question is so simple. Joe Caltabiano, a Chicago-based mortgage broker with Guaranteed Rate, cautions consumers about using online calculators to make mortgage decisions.

"I always tell people to talk to a professional," he says. Caltabiano adds that the problems with online mortgage calculators are that people don't always know what information to input and that it excludes other refinancing options that may be available.

However, Ewing says that one of the things that differentiates the Bills.com product from other online resources is that users don't need any knowledge of the interest rate market.

For example, the refinance calculator at the Bankrate.com site requires consumers to enter their new interest rate and the costs that will be incurred through a credit check, title insurance and lenders fees.

Other sites, like lendingtree.com and the mortgage publishing site, HSH.com, also have more complicated refinancing calculators that require more inputs and a greater understanding of your mortgage.

Though the Bills.com form is easy and clear, the oversimplified logic can also cause some hiccups that Ewing is looking to tackle when he rolls out the next version of the tool in a couple of weeks.

One issue: Choosing a goal of reducing monthly payments will only present users with an option for 5/1 ARM loans. Adjustable-rate loans will give you initially low rates, thus fulfilling the "goal," but will re-adjust to higher rates after a period of time, such as five years. This may not be the best choice for homeowners who plan to stay in a home for 15 or 20 years.

The bottom line? No, you don't have to go further than the Internet for an answer, but it never hurts to get a second opinion.

For more on mortgages and refinancing see these AOL Real Estate guides:

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

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