Home Refinancing Calculator
Use this calculator to compare your current mortgage with a potential new refinanced loan. Understand how refinancing could impact your monthly payments, total interest paid, and when you might break even on closing costs.
Refinance Comparison Results
New Monthly Payment:
Monthly Savings:
Break-Even Point:
Total Interest Over New Term (New Loan):
Total Interest Over Remaining Term (Current Loan):
Potential Total Interest Savings (Approx. over current remaining term):
Understanding Home Refinancing
Home refinancing involves replacing your existing mortgage with a new one, often with different terms, interest rates, or lenders. It's a common financial strategy homeowners use to achieve various goals, from lowering monthly payments to accessing home equity.
Why Consider Refinancing?
- Lower Interest Rate: If market rates have dropped since you took out your original mortgage, refinancing can secure a lower interest rate, significantly reducing your total interest paid and monthly payments.
- Lower Monthly Payments: By securing a lower interest rate or extending your loan term, you can reduce your monthly mortgage obligation, freeing up cash flow.
- Shorter Loan Term: Conversely, you might refinance to a shorter term (e.g., from 30 years to 15 years). While this usually increases your monthly payment, it drastically reduces the total interest paid over the life of the loan and helps you pay off your home faster.
- Cash-Out Refinance: This allows you to borrow more than your current mortgage balance, converting a portion of your home equity into cash. This cash can be used for home improvements, debt consolidation, or other financial needs.
- Switching Loan Types: You might switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage for payment stability, or vice-versa if you anticipate moving soon.
Key Factors to Consider
Before refinancing, it's crucial to evaluate several factors:
- Current Interest Rates: The primary driver for many refinances. A significant drop in rates can make refinancing very attractive.
- Closing Costs: Refinancing isn't free. You'll incur closing costs similar to your original mortgage, including appraisal fees, title insurance, origination fees, and more. These can range from 2% to 5% of the new loan amount.
- Break-Even Point: This is the time it takes for your monthly savings to offset the closing costs. If you plan to sell your home before reaching your break-even point, refinancing might not be financially beneficial.
- Credit Score: A higher credit score will typically qualify you for better interest rates.
- Home Equity: Lenders prefer borrowers with substantial equity in their homes.
How This Calculator Helps
Our Home Refinancing Calculator helps you quickly compare your current mortgage scenario with a potential new refinanced loan. By inputting your current loan details, proposed new loan terms, and estimated closing costs, you can instantly see:
- New Monthly Payment: What your new monthly obligation would be.
- Monthly Savings: The difference between your current and new monthly payments.
- Break-Even Point: How many months it will take for your monthly savings to recoup the refinance closing costs.
- Total Interest Paid: A comparison of the total interest you'd pay over the remaining term of your current loan versus the full term of your new loan. This helps you understand the long-term financial impact.
Use these insights to make an informed decision about whether refinancing is the right move for your financial situation.
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function calculateRefinance() {
// Get current loan details
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var currentLoanTermRemaining = parseFloat(document.getElementById("currentLoanTermRemaining").value);
var currentMonthlyPayment = parseFloat(document.getElementById("currentMonthlyPayment").value);
// Get new loan details
var newLoanAmount = parseFloat(document.getElementById("newLoanAmount").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTerm = parseFloat(document.getElementById("newLoanTerm").value);
var refinanceClosingCosts = parseFloat(document.getElementById("refinanceClosingCosts").value);
// Validate inputs
if (isNaN(currentLoanBalance) || isNaN(currentInterestRate) || isNaN(currentLoanTermRemaining) || isNaN(currentMonthlyPayment) ||
isNaN(newLoanAmount) || isNaN(newInterestRate) || isNaN(newLoanTerm) || isNaN(refinanceClosingCosts) ||
currentLoanBalance <= 0 || currentInterestRate < 0 || currentLoanTermRemaining <= 0 || currentMonthlyPayment <= 0 ||
newLoanAmount <= 0 || newInterestRate < 0 || newLoanTerm <= 0 || refinanceClosingCosts 0) {
breakEvenPointMonths = refinanceClosingCosts / monthlySavings;
} else if (monthlySavings < 0) {
breakEvenPointMonths = "Never (increased payment)";
} else {
breakEvenPointMonths = "N/A (no savings)";
}
// Calculate total interest for new loan over its full term
var totalInterestNew = (newMonthlyPayment * newNumberOfPayments) – newLoanAmount;
// Calculate total interest for current loan over its remaining term
var currentMonthlyRate = (currentInterestRate / 100) / 12;
var currentNumberOfPaymentsRemaining = currentLoanTermRemaining * 12;
var totalInterestCurrent;
if (currentMonthlyRate === 0) {
totalInterestCurrent = 0; // No interest if rate is 0
} else {
// This is a simplified calculation assuming currentMonthlyPayment is accurate for the remaining term.
// A more precise calculation would re-amortize the current loan balance.
// For simplicity and common use, we'll use the provided currentMonthlyPayment.
totalInterestCurrent = (currentMonthlyPayment * currentNumberOfPaymentsRemaining) – currentLoanBalance;
}
// Ensure totalInterestCurrent is not negative due to rounding or specific payment schedules
if (totalInterestCurrent < 0) totalInterestCurrent = 0;
// Calculate potential total interest savings (approximate, over the current remaining term)
// This comparison is tricky if terms are different. We'll compare total interest paid on new loan
// over the *current remaining term* vs. current loan's remaining interest.
// For simplicity, let's compare total interest over their respective full terms.
// A more accurate "savings" would require comparing payments over a common period.
// Let's define "Potential Total Interest Savings" as the difference between
// total interest paid on the current loan's remaining term vs. total interest paid on the new loan
// if it were paid off over the *same number of months as the current remaining term*.
// This is complex. A simpler, more common interpretation is comparing the total interest paid
// over the *full term* of the new loan vs. the *remaining term* of the current loan.
// This is what totalInterestNew and totalInterestCurrent represent.
// Let's provide a "Potential Total Interest Savings" as the difference between these two,
// with a caveat that terms might be different.
var potentialTotalInterestSavings = totalInterestCurrent – totalInterestNew;
// This is only truly "savings" if new loan term is 0) {
document.getElementById("totalInterestSavingsResult").innerText = "$" + potentialTotalInterestSavings.toFixed(2) + " (Savings)";
document.getElementById("totalInterestSavingsResult").style.color = "green";
} else if (potentialTotalInterestSavings < 0) {
document.getElementById("totalInterestSavingsResult").innerText = "$" + Math.abs(potentialTotalInterestSavings).toFixed(2) + " (Additional Cost)";
document.getElementById("totalInterestSavingsResult").style.color = "red";
} else {
document.getElementById("totalInterestSavingsResult").innerText = "$" + potentialTotalInterestSavings.toFixed(2) + " (No Change)";
document.getElementById("totalInterestSavingsResult").style.color = "#0056b3";
}
}
// Run calculation on page load with default values
window.onload = calculateRefinance;