Calculate your potential new monthly mortgage payment after refinancing.
Understanding Mortgage Refinancing
Refinancing a mortgage means replacing your existing home loan with a new one. Homeowners typically refinance for several reasons, including to secure a lower interest rate, change the loan term, or tap into home equity. This calculator helps you estimate the potential monthly payment of a new loan after considering your current balance, new interest rate, loan term, and associated closing costs.
How the Calculation Works
The core of the refinance calculation involves determining the monthly payment for the new loan. We use the standard Amortization Formula for this:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (principal and interest)
P = The principal loan amount (this is your Current Loan Balance + Estimated Closing Costs)
i = Your monthly interest rate (Annual Interest Rate / 12)
n = The total number of payments over the loan's lifetime (Loan Term in Years * 12)
Our calculator takes your inputs and applies this formula to provide an estimated new Principal & Interest (P&I) payment. It's important to remember that this calculation does NOT include property taxes, homeowner's insurance, or private mortgage insurance (PMI), which will be added to your actual total monthly housing expense.
When to Consider Refinancing
Lowering Your Interest Rate: If current market rates are significantly lower than your existing loan's rate, refinancing can save you a substantial amount of money over the life of the loan.
Shortening Your Loan Term: You might refinance into a shorter term (e.g., from 30 years to 15 years) to pay off your mortgage faster and reduce the total interest paid, though your monthly payment will likely increase.
Cash-Out Refinance: If your home's value has increased, you might be able to refinance for more than you currently owe and receive the difference in cash, which can be used for home improvements, debt consolidation, or other large expenses.
Switching Loan Types: You might refinance from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage for payment stability, or vice-versa.
Important Note: Always factor in closing costs. Your new, lower monthly payment needs to be enough to offset these costs within a reasonable timeframe (your break-even point) for the refinance to be financially beneficial.
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTerm = parseFloat(document.getElementById("newLoanTerm").value);
var closingCosts = parseFloat(document.getElementById("closingCosts").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
if (isNaN(currentLoanBalance) || isNaN(newInterestRate) || isNaN(newLoanTerm) || isNaN(closingCosts) ||
currentLoanBalance < 0 || newInterestRate < 0 || newLoanTerm <= 0 || closingCosts 0) {
// Standard Amortization Formula
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle case where interest rate is 0
monthlyPayment = principal / numberOfPayments;
}
// Format the results
var formattedMonthlyPayment = monthlyPayment.toFixed(2);
var formattedPrincipal = principal.toFixed(2);
resultDiv.innerHTML = 'Estimated New Monthly Payment (P&I): $' + formattedMonthlyPayment + '' +
'New Loan Principal: $' + formattedPrincipal + '';
}
function resetForm() {
document.getElementById("currentLoanBalance").value = "200000";
document.getElementById("newInterestRate").value = "4.5";
document.getElementById("newLoanTerm").value = "30";
document.getElementById("closingCosts").value = "3000";
document.getElementById("result").innerHTML = "";
}