Estimate potential savings and costs of refinancing your mortgage.
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Your Refinance Estimates
Monthly Payment (Current Loan):$0.00
Monthly Payment (New Loan):$0.00
Monthly Savings:$0.00
Break-Even Point (Months):N/A
Total Savings Over New Loan Term:$0.00
Total Paid (Current Loan – Remaining):$0.00
Total Paid (New Loan):$0.00
Understanding Mortgage Refinancing
Refinancing your mortgage means replacing your existing home loan with a new one. This is often done to take advantage of lower interest rates, change the loan term, switch loan types (e.g., from an adjustable-rate to a fixed-rate mortgage), or tap into your home's equity. While refinancing can lead to significant savings, it also involves costs, such as closing costs, that need to be considered.
Why Refinance?
Lower Interest Rate: If market interest rates have dropped since you got your original loan, refinancing can reduce your monthly payments and the total interest paid over the life of the loan.
Change Loan Term: You might want to shorten your loan term to pay off your home faster or extend it to lower your monthly payments.
Switch Loan Types: Moving from an ARM to a fixed-rate mortgage provides payment stability.
Cash-Out Refinance: Borrowing more than your outstanding mortgage balance and using the difference for home improvements, debt consolidation, or other major expenses.
How the Calculator Works
Our Mortgage Refinance Calculator helps you estimate the financial impact of refinancing. It calculates:
Current Monthly Payment: Based on your current loan balance, interest rate, and remaining loan term.
New Monthly Payment: Based on your current loan balance, the new interest rate, and the new loan term.
Monthly Savings: The difference between your current and new monthly payments.
Break-Even Point: The number of months it takes for your monthly savings to offset the closing costs of the refinance. This is crucial for determining if refinancing is financially viable in the short to medium term.
Total Savings Over New Loan Term: The total interest saved over the entire duration of the new loan, after accounting for closing costs.
The Math Behind Refinancing Calculations
The core of mortgage calculations involves the loan amortization formula. The monthly payment (M) is calculated as:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (your current loan balance)
i = Monthly interest rate (annual rate divided by 12, e.g., 4.5% annual becomes 0.045 / 12 = 0.00375 monthly)
n = Total number of payments (loan term in months)
The calculator uses this formula to determine the monthly payments for both your current and proposed new loan. The remaining payments for the current loan are calculated based on the input remaining term. The total paid on the current loan is the current monthly payment multiplied by the remaining term. The total paid on the new loan is the new monthly payment multiplied by the new loan term. The break-even point is found by dividing the closing costs by the monthly savings.
When Does Refinancing Make Sense?
Refinancing generally makes sense if:
The new interest rate is at least 0.5% to 1% lower than your current rate.
You plan to stay in your home long enough to recoup the closing costs through monthly savings (i.e., the break-even point is within a reasonable timeframe for you).
Your financial situation has improved, allowing you to qualify for better terms.
Consider consulting with a mortgage professional to discuss your specific situation and get personalized advice.
function calculateMonthlyPayment(principal, annualRate, termMonths) {
var principal = parseFloat(principal);
var annualRate = parseFloat(annualRate);
var termMonths = parseInt(termMonths);
if (isNaN(principal) || isNaN(annualRate) || isNaN(termMonths) || principal <= 0 || termMonths <= 0) {
return 0;
}
var monthlyRate = annualRate / 100 / 12;
var payment = principal * (monthlyRate * Math.pow(1 + monthlyRate, termMonths)) / (Math.pow(1 + monthlyRate, termMonths) – 1);
return isNaN(payment) ? 0 : payment;
}
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var loanTermMonths = parseInt(document.getElementById("loanTermMonths").value);
var closingCosts = parseFloat(document.getElementById("closingCosts").value);
var remainingTermMonths = parseInt(document.getElementById("remainingTermMonths").value);
var currentMonthlyPayment = calculateMonthlyPayment(currentLoanBalance, currentInterestRate, remainingTermMonths);
var newMonthlyPayment = calculateMonthlyPayment(currentLoanBalance, newInterestRate, loanTermMonths);
var monthlySavings = currentMonthlyPayment – newMonthlyPayment;
var breakEvenPoint = closingCosts / monthlySavings;
var totalPaidCurrentRemaining = currentMonthlyPayment * remainingTermMonths;
var totalPaidNewLoan = newMonthlyPayment * loanTermMonths;
var totalSavingsOverTerm = totalPaidCurrentRemaining – (totalPaidNewLoan + closingCosts);
var formattedCurrentMonthlyPayment = currentMonthlyPayment.toFixed(2);
var formattedNewMonthlyPayment = newMonthlyPayment.toFixed(2);
var formattedMonthlySavings = monthlySavings.toFixed(2);
var formattedTotalSavingsOverTerm = totalSavingsOverTerm.toFixed(2);
var formattedTotalPaidCurrentRemaining = totalPaidCurrentRemaining.toFixed(2);
var formattedTotalPaidNewLoan = totalPaidNewLoan.toFixed(2);
var formattedBreakEvenPoint = isNaN(breakEvenPoint) || !isFinite(breakEvenPoint) || breakEvenPoint < 0 ? "N/A" : breakEvenPoint.toFixed(1) + " months";
document.getElementById("currentMonthlyPayment").textContent = "$" + formattedCurrentMonthlyPayment;
document.getElementById("newMonthlyPayment").textContent = "$" + formattedNewMonthlyPayment;
document.getElementById("monthlySavings").textContent = "$" + formattedMonthlySavings;
document.getElementById("breakEvenPoint").textContent = formattedBreakEvenPoint;
document.getElementById("totalSavingsOverTerm").textContent = "$" + formattedTotalSavingsOverTerm;
document.getElementById("totalPaidCurrentRemaining").textContent = "$" + formattedTotalPaidCurrentRemaining;
document.getElementById("totalPaidNewLoan").textContent = "$" + formattedTotalPaidNewLoan;
// Highlight potential negative savings
var savingsDisplay = document.getElementById("monthlySavings");
if (monthlySavings 60) {
breakEvenDisplay.parentElement.style.backgroundColor = "#fff3cd"; // Yellowish tint
breakEvenDisplay.parentElement.style.borderColor = "#ffc107";
} else if (isNaN(breakEvenPoint) || !isFinite(breakEvenPoint) || breakEvenPoint < 0) {
// Keep default or adjust as needed
}
else {
breakEvenDisplay.parentElement.style.backgroundColor = "#e9f5ff";
breakEvenDisplay.parentElement.style.borderColor = "#004a99";
}
}
function resetCalculator() {
document.getElementById("currentLoanBalance").value = "";
document.getElementById("currentInterestRate").value = "";
document.getElementById("newInterestRate").value = "";
document.getElementById("loanTermMonths").value = "";
document.getElementById("closingCosts").value = "";
document.getElementById("remainingTermMonths").value = "";
document.getElementById("currentMonthlyPayment").textContent = "$0.00";
document.getElementById("newMonthlyPayment").textContent = "$0.00";
document.getElementById("monthlySavings").textContent = "$0.00";
document.getElementById("breakEvenPoint").textContent = "N/A";
document.getElementById("totalSavingsOverTerm").textContent = "$0.00";
document.getElementById("totalPaidCurrentRemaining").textContent = "$0.00";
document.getElementById("totalPaidNewLoan").textContent = "$0.00";
// Reset styles
document.getElementById("monthlySavings").style.color = "#28a745";
document.getElementById("breakEvenPoint").parentElement.style.backgroundColor = "#e9f5ff";
document.getElementById("breakEvenPoint").parentElement.style.borderColor = "#004a99";
}