function calculateRefinance() {
var currentBalance = parseFloat(document.getElementById('currentBalance').value);
var currentPayment = parseFloat(document.getElementById('currentPayment').value);
var newRate = parseFloat(document.getElementById('newRate').value) / 100 / 12;
var newTermMonths = parseInt(document.getElementById('newTerm').value) * 12;
var refiCosts = parseFloat(document.getElementById('refiCosts').value);
if (isNaN(currentBalance) || isNaN(currentPayment) || isNaN(newRate) || isNaN(refiCosts)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// Calculate New Monthly Payment: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var x = Math.pow(1 + newRate, newTermMonths);
var newMonthlyPayment = (currentBalance * x * newRate) / (x – 1);
var monthlySavings = currentPayment – newMonthlyPayment;
var breakEvenMonths = refiCosts / monthlySavings;
// Note: This is a simplified total savings calculation (Current payment * remaining life vs New payment * life)
// For SEO purposes, we show the delta in payments over the new term minus the closing costs.
var totalInterestSavings = (monthlySavings * newTermMonths) – refiCosts;
document.getElementById('newMonthlyPaymentResult').innerHTML = '$' + newMonthlyPayment.toFixed(2);
document.getElementById('monthlySavingsResult').innerHTML = '$' + monthlySavings.toFixed(2);
if (monthlySavings <= 0) {
document.getElementById('breakEvenResult').innerHTML = 'Never';
document.getElementById('monthlySavingsResult').style.color = '#e74c3c';
document.getElementById('totalSavingsResult').innerHTML = 'N/A';
} else {
document.getElementById('breakEvenResult').innerHTML = Math.ceil(breakEvenMonths) + ' Months';
document.getElementById('monthlySavingsResult').style.color = '#2ecc71';
document.getElementById('totalSavingsResult').innerHTML = '$' + totalInterestSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
document.getElementById('refiResult').style.display = 'block';
}
Should You Refinance Your Mortgage?
Deciding to refinance your home loan is a significant financial move that can potentially save you thousands of dollars over the life of your mortgage. However, it isn't always the right choice for every homeowner. This mortgage refinance savings calculator helps you determine if the monthly savings outweigh the upfront closing costs.
Understanding the Break-Even Point
The "break-even point" is the most critical metric in refinancing. It represents the number of months it takes for your monthly savings to cover the total cost of refinancing (closing costs). For example, if your refinance costs $5,000 and you save $200 per month, your break-even point is 25 months. If you plan to sell the house in two years, refinancing would actually lose you money.
Key Factors to Consider
Interest Rate Differential: A general rule of thumb is that refinancing makes sense if you can lower your rate by at least 0.75% to 1%.
Closing Costs: These typically range from 2% to 5% of the loan amount. Ensure these are factored into your "Lifetime Interest Savings."
Loan Term: Switching from a 30-year to a 15-year mortgage will increase your monthly payment but drastically reduce the total interest paid.
Equity: Most lenders require at least 20% equity for the best rates and to avoid Private Mortgage Insurance (PMI).
Example Scenario
Imagine you have a current balance of $300,000 on a 30-year fixed loan. Your current interest rate is 6.5%, but market rates have dropped to 5.0%.
Current Payment: ~$1,896 (Principal & Interest)
New Payment (at 5%): ~$1,610
Monthly Savings: $286
Closing Costs: $6,000
Break-Even: ~21 months
In this scenario, if you stay in the home for more than 21 months, refinancing is a financially sound decision.