30 Years Fixed
20 Years Fixed
15 Years Fixed
10 Years Fixed
Calculation Results
Old Monthly Payment:
New Monthly Payment:
Monthly Savings:
Break-Even Period:
Total Savings (Over Life of Loan):
function calculateRefinance() {
var balance = parseFloat(document.getElementById('refi_currentBalance').value);
var currentRate = parseFloat(document.getElementById('refi_currentRate').value) / 100 / 12;
var newRate = parseFloat(document.getElementById('refi_newRate').value) / 100 / 12;
var termYears = parseInt(document.getElementById('refi_newTerm').value);
var closingCosts = parseFloat(document.getElementById('refi_closingCosts').value);
var termMonths = termYears * 12;
if (isNaN(balance) || isNaN(currentRate) || isNaN(newRate) || isNaN(closingCosts)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Current payment (assuming 30 years for comparison purposes or simplified logic)
var currentPayment = (balance * currentRate * Math.pow(1 + currentRate, 360)) / (Math.pow(1 + currentRate, 360) – 1);
// New payment
var newPayment = (balance * newRate * Math.pow(1 + newRate, termMonths)) / (Math.pow(1 + newRate, termMonths) – 1);
var monthlySavings = currentPayment – newPayment;
var breakEvenMonths = closingCosts / monthlySavings;
var totalNewInterest = (newPayment * termMonths) – balance;
var totalOldInterest = (currentPayment * termMonths) – balance;
var totalSavings = (currentPayment * termMonths) – (newPayment * termMonths) – closingCosts;
document.getElementById('res_oldPayment').innerText = "$" + currentPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_newPayment').innerText = "$" + newPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_monthlySavings').innerText = "$" + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings <= 0) {
document.getElementById('res_breakEven').innerText = "Never (New payment is higher)";
document.getElementById('res_totalSavings').innerText = "N/A";
} else {
document.getElementById('res_breakEven').innerText = Math.ceil(breakEvenMonths) + " months";
document.getElementById('res_totalSavings').innerText = "$" + totalSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
document.getElementById('refi_results').style.display = 'block';
}
Should You Refinance Your Mortgage?
Deciding to refinance your home is a major financial milestone. While lowering your interest rate is the most common goal, understanding the full impact on your monthly budget and long-term interest costs is essential. This Mortgage Refinance Savings Calculator helps you determine if the upfront costs of refinancing are worth the potential long-term benefits.
How This Calculator Works
To get an accurate estimate of your savings, you will need to input four key pieces of data:
Current Loan Balance: The remaining principal on your existing mortgage.
Estimated Closing Costs: Refinancing isn't free. You typically pay 2% to 5% of the loan amount in appraisal fees, title insurance, and lender fees.
Current vs. New Interest Rate: Even a 0.5% difference can result in thousands of dollars in savings over time.
New Loan Term: Moving from a 30-year to a 15-year mortgage can save you massive amounts in interest but may increase your monthly payment.
Understanding the "Break-Even" Point
The most important metric in refinancing is the Break-Even Point. This is the number of months it takes for your monthly savings to "pay back" the closing costs of the new loan. For example, if your closing costs are $5,000 and you save $200 per month, your break-even point is 25 months. If you plan to move within two years, refinancing might actually cost you money instead of saving it.
Example Calculation
Scenario: You have a $300,000 balance at a 6.5% interest rate. You find a new rate of 5.25% with $5,000 in closing costs on a new 30-year term.
Old Payment: $1,896.20
New Payment: $1,655.33
Monthly Savings: $240.87
Break-Even: ~21 months
In this case, after less than two years, the refinance has paid for itself, and every month thereafter is pure profit.
Frequently Asked Questions
1. Is a 1% drop in interest rate enough to refinance?
Generally, yes. Many experts suggest that a 0.75% to 1% reduction is the "sweet spot" for refinancing, though even smaller drops can be beneficial if you plan to stay in the home for a long time.
2. Can I roll closing costs into the loan?
Yes, many lenders offer "no-cash-out" refinances where the costs are added to the principal. However, keep in mind you will pay interest on those costs for the duration of the loan.
3. Does refinancing hurt my credit score?
A refinance involves a hard credit inquiry, which may cause a temporary dip in your score (usually 5-10 points). However, the long-term benefit of a lower debt-to-income ratio often outweighs this minor dip.