function calculateRefinance() {
var balance = parseFloat(document.getElementById('currentBalance').value);
var currentMonthly = parseFloat(document.getElementById('currentMonthly').value);
var newRate = parseFloat(document.getElementById('newRate').value) / 100 / 12;
var newTermMonths = parseFloat(document.getElementById('newTerm').value) * 12;
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
if (isNaN(balance) || isNaN(currentMonthly) || isNaN(newRate) || isNaN(closingCosts)) {
alert('Please enter valid numerical values in all fields.');
return;
}
// Calculate New Monthly Principal & Interest Payment
var x = Math.pow(1 + newRate, newTermMonths);
var newMonthlyPayment = (balance * x * newRate) / (x – 1);
// Savings
var monthlySavings = currentMonthly – newMonthlyPayment;
var breakEvenMonths = closingCosts / monthlySavings;
// Total Savings over life (this is an estimate based on current balance and interest)
// Note: This assumes currentMonthly covers only P&I for simplicity, or that taxes/insurance stay the same
var totalNewCost = (newMonthlyPayment * newTermMonths) + closingCosts;
// For a basic comparison, we look at monthly savings extended, but break-even is most accurate for refis
var lifetimeInterestSavings = (monthlySavings * newTermMonths) – closingCosts;
document.getElementById('resNewPayment').innerText = '$' + newMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMonthlySavings').innerText = '$' + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings <= 0) {
document.getElementById('resBreakEven').innerText = 'Never (No Savings)';
document.getElementById('resLifeSavings').innerText = '$0.00';
} else {
document.getElementById('resBreakEven').innerText = Math.ceil(breakEvenMonths) + ' Months';
document.getElementById('resLifeSavings').innerText = '$' + lifetimeInterestSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
document.getElementById('resultsArea').style.display = 'block';
}
Should You Refinance Your Mortgage?
Refinancing your mortgage involves replacing your existing home loan with a new one, typically to take advantage of lower interest rates or to change the loan term. This calculator helps you determine if the long-term savings outweigh the upfront closing costs.
Understanding the Break-Even Point
The "Break-Even Point" is perhaps the most critical metric in a refinance analysis. It represents the number of months it takes for your monthly savings to cover the total closing costs of the new loan. For example, if your closing costs are $5,000 and you save $200 per month, your break-even point is 25 months. If you plan to sell the home before reaching this point, refinancing might actually cost you money.
How to Use the Refinance Calculator
Current Loan Balance: Enter the remaining principal balance on your current mortgage statement.
Current Monthly Payment: Enter your current Monthly Principal and Interest (P&I) payment. (Exclude taxes and insurance as they usually remain the same).
New Interest Rate: The rate currently being offered by lenders based on your credit score.
Closing Costs: Typically 2% to 5% of the loan amount. This includes appraisal fees, title insurance, and origination fees.
Example Scenario
Imagine you have a $300,000 balance on a mortgage with an interest rate of 6.5%. Your current P&I payment is roughly $1,896. If you refinance into a new 30-year loan at 4.5% with $6,000 in closing costs:
New Payment: $1,520
Monthly Savings: $376
Break-even: 16 Months
In this case, after just 16 months, every dollar saved is pure profit. Over 30 years, you would save over $129,000 in interest payments.
SEO Tip: When considering a refinance, remember that extending your term back to 30 years might lower your monthly payment but could increase the total interest paid over time compared to your original loan. Always check the "Lifetime Interest Savings" to see the full picture.