function calculateRefi() {
var balance = parseFloat(document.getElementById('loanBalance').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var currentRate = parseFloat(document.getElementById('currentRate').value) / 100 / 12;
var newRate = parseFloat(document.getElementById('newRate').value) / 100 / 12;
var currentTermRemaining = parseInt(document.getElementById('remainingMonths').value);
var newTermMonths = parseInt(document.getElementById('newTerm').value) * 12;
if (isNaN(balance) || isNaN(currentRate) || isNaN(newRate) || isNaN(currentTermRemaining)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// Calculate current monthly payment
var currentPayment = balance * (currentRate * Math.pow(1 + currentRate, currentTermRemaining)) / (Math.pow(1 + currentRate, currentTermRemaining) – 1);
// Calculate new monthly payment
var newPayment = balance * (newRate * Math.pow(1 + newRate, newTermMonths)) / (Math.pow(1 + newRate, newTermMonths) – 1);
// Savings and Break even
var monthlySavings = currentPayment – newPayment;
var breakEvenMonths = closingCosts / monthlySavings;
// Total interest current
var totalInterestCurrent = (currentPayment * currentTermRemaining) – balance;
// Total interest new
var totalInterestNew = (newPayment * newTermMonths) – balance;
var totalInterestSavings = totalInterestCurrent – totalInterestNew;
// Display results
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('monthlySavings').innerText = '$' + Math.max(0, monthlySavings).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('newPayment').innerText = '$' + newPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings > 0) {
document.getElementById('breakEven').innerText = Math.ceil(breakEvenMonths) + " Months";
document.getElementById('totalSavings').innerText = '$' + totalInterestSavings.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
if (breakEvenMonths < 36) {
document.getElementById('refiAdvice').innerText = "This refinance looks strong! You'll recover your costs in less than 3 years.";
} else {
document.getElementById('refiAdvice').innerText = "Consider how long you plan to stay in the home. Your break-even point is over 3 years away.";
}
} else {
document.getElementById('breakEven').innerText = "N/A";
document.getElementById('totalSavings').innerText = "$0";
document.getElementById('refiAdvice').innerText = "Warning: Your new monthly payment is higher than your current payment.";
}
}
Understanding Mortgage Refinance Savings
Deciding whether to refinance your mortgage is a significant financial decision. While a lower interest rate is the primary motivator, it is not the only factor. You must account for closing costs, the length of the new loan term, and your break-even point.
What is the Break-Even Point?
The break-even point is the moment when the monthly savings from your new, lower mortgage payment equal the total amount you paid in 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 your home before those 25 months are up, refinancing might actually cost you money.
Example Refinance Scenario
Current Loan: $300,000 at 6.5% interest
New Loan: $300,000 at 5.25% interest
Monthly Payment (Current): $1,896.20
Monthly Payment (New 30yr): $1,656.61
Monthly Savings: $239.59
Closing Costs: $5,000
Break-even: ~21 months
When Should You Refinance?
Most financial experts suggest refinancing is worth considering if you can lower your interest rate by at least 0.75% to 1.00%. However, if you are shortening your loan term (e.g., from a 30-year to a 15-year mortgage), your monthly payment might increase even though you are saving thousands in long-term interest.
Key Considerations Before Applying
Credit Score: A higher credit score will help you secure the lowest possible rates.
Home Equity: Most lenders require at least 20% equity to avoid Private Mortgage Insurance (PMI) on the new loan.
Debt-to-Income (DTI) Ratio: Lenders will re-evaluate your ability to pay back the loan based on your current income and debts.