Estimate your potential monthly savings by refinancing your current mortgage.
Enter your current annual interest rate.
Remaining years on your current mortgage.
The proposed annual interest rate for your new loan.
The term in years for your new mortgage.
Include fees, closing costs, appraisals, etc.
Estimated Monthly Savings:
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Total Savings (First 5 Years):
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Understanding Home Refinancing and Your Savings
Home refinancing involves replacing your existing mortgage with a new one, typically to secure a lower interest rate, change the loan term, or tap into your home's equity. This calculator helps you estimate the potential financial benefits of refinancing, focusing on monthly payment reduction and long-term savings.
How the Calculator Works
The calculator uses standard mortgage amortization formulas to determine your current monthly payment and the projected monthly payment for a refinanced loan. The difference between these two payments reveals your potential monthly savings.
Key Inputs Explained:
Current Loan Balance: The outstanding amount you still owe on your current mortgage.
Current Interest Rate (%): The annual interest rate of your existing mortgage.
Current Loan Term (Years): The remaining number of years left on your current mortgage.
New Interest Rate (%): The annual interest rate you expect to get with the new refinanced mortgage.
New Loan Term (Years): The term (in years) of the proposed new mortgage. You might choose a longer term to lower monthly payments, or a shorter term to pay off the loan faster.
Estimated Refinance Costs ($): This includes all fees and closing costs associated with obtaining the new loan, such as appraisal fees, title insurance, origination fees, and recording fees. These costs are crucial for calculating your true net savings over time.
The Math Behind the Savings:
The core of the calculation relies on the monthly mortgage payment formula (M):
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 (Loan Term in Years * 12)
The calculator first computes 'M' for your current loan parameters and then for the proposed new loan parameters.
Monthly Savings = Current Monthly Payment – New Monthly Payment
The calculator also considers your Estimated Refinance Costs. The "Total Savings (First 5 Years)" provides a snapshot of your financial benefit, factoring in these upfront costs. A positive value here indicates that your monthly savings are recouping the refinance costs within that period.
When Does Refinancing Make Sense?
Lowering Interest Rates: The most common reason. Even a small reduction in your interest rate can lead to significant savings over the life of a loan.
Reducing Monthly Payments: Refinancing to a lower interest rate or a longer loan term can make your monthly payments more manageable.
Shortening the Loan Term: You can refinance into a shorter term (e.g., from a 30-year to a 15-year mortgage) to pay off your home faster, though this usually increases monthly payments.
Accessing Home Equity: Cash-out refinancing allows you to borrow against your home's equity for purposes like home improvements, debt consolidation, or major purchases.
Always compare the total cost of the new loan (including interest and fees) against your current loan to ensure refinancing is financially beneficial for your specific situation. Remember to factor in how long you plan to stay in the home when evaluating long-term savings.
function calculateMortgagePayment(principal, annualRate, termYears) {
if (isNaN(principal) || isNaN(annualRate) || isNaN(termYears) || principal <= 0 || annualRate < 0 || termYears <= 0) {
return 0; // Return 0 for invalid inputs to avoid NaN in calculations
}
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = termYears * 12;
var payment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
return isNaN(payment) ? 0 : payment;
}
function calculateRefinanceSavings() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var currentLoanTerm = parseFloat(document.getElementById("currentLoanTerm").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTerm = parseFloat(document.getElementById("newLoanTerm").value);
var refinanceCosts = parseFloat(document.getElementById("refinanceCosts").value);
var monthlySavingsValueElement = document.getElementById("monthlySavingsValue");
var totalSavingsValueElement = document.getElementById("totalSavingsValue");
// Validate inputs
if (isNaN(currentLoanBalance) || isNaN(currentInterestRate) || isNaN(currentLoanTerm) ||
isNaN(newInterestRate) || isNaN(newLoanTerm) || isNaN(refinanceCosts) ||
currentLoanBalance <= 0 || currentInterestRate < 0 || currentLoanTerm <= 0 ||
newInterestRate < 0 || newLoanTerm <= 0 || refinanceCosts 0) {
monthlySavingsValueElement.style.color = "#28a745";
} else {
monthlySavingsValueElement.style.color = "#dc3545";
}
if (totalSavingsFirst5Years > 0) {
totalSavingsValueElement.style.color = "#28a745";
} else {
totalSavingsValueElement.style.color = "#dc3545";
}
}