30 Years Fixed
20 Years Fixed
15 Years Fixed
10 Years Fixed
New Monthly Payment
$0
Monthly Savings
$0
Break-Even Point
0 Months
Total Savings (Life of Loan)
$0
function calculateRefinance() {
var balance = parseFloat(document.getElementById('loanBalance').value);
var currentPay = parseFloat(document.getElementById('currentPayment').value);
var newRate = parseFloat(document.getElementById('newRate').value) / 100 / 12;
var years = parseInt(document.getElementById('newTerm').value);
var costs = parseFloat(document.getElementById('closingCosts').value);
var months = years * 12;
if (isNaN(balance) || isNaN(currentPay) || isNaN(newRate) || isNaN(costs)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// Calculate New Payment using standard Amortization: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var x = Math.pow(1 + newRate, months);
var newMonthlyPayment = (balance * x * newRate) / (x – 1);
var monthlySavings = currentPay – newMonthlyPayment;
var breakEvenMonths = costs / monthlySavings;
var totalSavings = (monthlySavings * months) – costs;
document.getElementById('resNewPayment').innerHTML = "$" + newMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMonthlySavings').innerHTML = "$" + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings > 0) {
document.getElementById('resBreakEven').innerHTML = Math.ceil(breakEvenMonths) + " Months";
document.getElementById('resTotalSavings').innerHTML = "$" + totalSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('refiSummary').innerHTML = "By refinancing, you will cover your closing costs in " + Math.ceil(breakEvenMonths) + " months.";
} else {
document.getElementById('resBreakEven').innerHTML = "N/A";
document.getElementById('resTotalSavings').innerHTML = "No Savings";
document.getElementById('refiSummary').innerHTML = "Caution: Your new payment is higher than your current payment. Refinancing may not be financially beneficial in this scenario.";
}
document.getElementById('refiResults').style.display = 'block';
}
Is Now the Right Time to Refinance Your Mortgage?
Deciding to refinance your home is a major financial move. A mortgage refinance involves replacing your current home loan with a new one, typically to secure a lower interest rate, change the loan term, or tap into home equity. Our Mortgage Refinance Savings Calculator helps you determine if the long-term savings outweigh the upfront costs.
Key Factors in the Refinance Calculation
Interest Rate Spread: Generally, experts suggest refinancing if you can lower your interest rate by at least 0.75% to 1%.
Closing Costs: Refinancing isn't free. Expect to pay 2% to 5% of the loan amount in appraisal fees, origination fees, and title insurance.
The Break-Even Point: This is the most critical metric. It represents the number of months it takes for your monthly savings to "pay back" the closing costs. If you plan to sell the home before reaching the break-even point, refinancing might lose you money.
A Realistic Refinance Example
Imagine you have a remaining balance of $300,000 on a 30-year fixed mortgage at 7%. Your current monthly principal and interest payment is approximately $1,995.
If you refinance into a new 30-year loan at 5.5% with $5,000 in closing costs:
New Monthly Payment: $1,703
Monthly Savings: $292
Break-Even Point: 18 Months ($5,000 / $292)
In this scenario, after just a year and a half, the loan pays for its own costs, and you begin saving nearly $300 every single month.
Frequently Asked Questions
Can I refinance with little equity?
While 20% equity is ideal to avoid Private Mortgage Insurance (PMI), some government programs like FHA Streamline or VA Interest Rate Reduction Refinance Loans (IRRRL) allow for refinancing with minimal equity.
Does refinancing hurt my credit score?
A refinance triggers a hard credit inquiry, which may cause a temporary dip of a few points. However, long-term savings and lower monthly debt obligations often improve your credit profile over time.