Calculate potential savings by refinancing your current home loan.
Your estimated monthly savings: $0.00
Your estimated total savings over remaining term: $0.00
Break-even point for closing costs: 0 months
Understanding Home Refinancing and Your Savings
Refinancing your home loan involves replacing your existing mortgage with a new one. This can be a strategic financial move to take advantage of lower interest rates, change your loan term, or switch loan types (e.g., from an adjustable-rate to a fixed-rate mortgage). The primary goal for many homeowners is to reduce their monthly payments and save money over the life of the loan.
How the Refinance Calculator Works
Our Home Refinance Calculator helps you estimate the potential financial benefits of refinancing. It compares your current loan's payment and total interest to the proposed new loan's payment and total interest, factoring in the costs associated with the refinance itself.
Key Inputs:
Current Loan Balance: The outstanding principal amount on your existing mortgage.
Current Interest Rate: The annual interest rate of your current loan.
New Interest Rate: The proposed annual interest rate for your new refinanced loan.
Remaining Loan Term (Years): The number of years left on your current loan. This is crucial for accurate comparison.
Estimated Refinance Closing Costs: These are the fees and expenses associated with obtaining a new mortgage (e.g., appraisal fees, title insurance, origination fees).
The Math Behind the Savings:
The calculator uses the standard mortgage payment formula (Amortization Formula) to determine the monthly payments for both your current loan and the proposed new loan. The formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount (Current Loan Balance)
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Remaining Loan Term in Years * 12)
Monthly Savings: Calculated by subtracting the new estimated monthly payment from the current estimated monthly payment.
Total Interest Savings: Calculated by comparing the total interest paid on the original loan versus the total interest paid on the new loan over the remaining term.
Break-Even Point: This is calculated by dividing the total refinance closing costs by the monthly savings. It tells you how many months it will take for your monthly savings to offset the upfront costs of refinancing.
When Should You Consider Refinancing?
Lower Interest Rates: If market rates have dropped significantly since you took out your current loan.
Improve Credit Score: A higher credit score can qualify you for better rates.
Change Loan Term: Shorten your term to pay off faster or extend it to lower monthly payments.
Switch Loan Type: Move from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage for payment stability, or vice versa if beneficial.
Tap into Home Equity: Cash-out refinances allow you to borrow against your home's equity.
Disclaimer: This calculator provides an estimate. Actual savings may vary based on specific loan terms, lender fees, and market conditions. It's always recommended to consult with a mortgage professional for personalized advice.
function calculateMonthlyPayment(principal, annualRate, termYears) {
if (principal <= 0 || annualRate < 0 || termYears <= 0) {
return 0;
}
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = termYears * 12;
if (monthlyRate === 0) {
return principal / numberOfPayments;
}
var payment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
return isNaN(payment) ? 0 : payment;
}
function calculateTotalInterest(principal, annualRate, termYears) {
if (principal <= 0 || annualRate < 0 || termYears <= 0) {
return 0;
}
var monthlyPayment = calculateMonthlyPayment(principal, annualRate, termYears);
var totalPayments = monthlyPayment * termYears * 12;
var totalInterest = totalPayments – principal;
return isNaN(totalInterest) ? 0 : totalInterest;
}
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var remainingLoanTerm = parseFloat(document.getElementById("remainingLoanTerm").value);
var refiClosingCosts = parseFloat(document.getElementById("refiClosingCosts").value);
var monthlySavings = 0;
var totalSavings = 0;
var breakEven = 0;
if (isNaN(currentLoanBalance) || currentLoanBalance <= 0 ||
isNaN(currentInterestRate) || currentInterestRate < 0 ||
isNaN(newInterestRate) || newInterestRate < 0 ||
isNaN(remainingLoanTerm) || remainingLoanTerm <= 0 ||
isNaN(refiClosingCosts) || refiClosingCosts 0) {
breakEven = refiClosingCosts / monthlySavings;
} else {
breakEven = Infinity; // Cannot break even if no monthly savings
}
document.getElementById("monthlySavings").textContent = "$" + (monthlySavings > 0 ? monthlySavings.toFixed(2) : "0.00");
document.getElementById("totalSavings").textContent = "$" + (netTotalSavings >= 0 ? netTotalSavings.toFixed(2) : "0.00");
document.getElementById("breakEven").textContent = isFinite(breakEven) ? Math.ceil(breakEven) + " months" : "N/A";
}