Calculate your potential new monthly mortgage payment after refinancing.
Understanding Mortgage Refinancing and Rate Calculations
Refinancing your mortgage can be a strategic financial move, allowing you to potentially lower your monthly payments, shorten your loan term, or tap into your home's equity.
The core of a refinance decision often hinges on the new interest rate you can secure compared to your current rate.
This calculator helps you estimate your new monthly principal and interest (P&I) payment after refinancing, taking into account your current loan balance, the new interest rate, the remaining term of your loan, and any associated origination fees.
How the Refinance Payment is Calculated
The monthly payment for a mortgage is calculated using an amortizing loan formula. The formula determines the fixed monthly payment required to pay off a loan over a set period.
For refinancing, we use the same principle but apply it to your new loan terms.
The standard formula for calculating the monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount. For our refinance calculator, this is your current loan balance plus any origination fees rolled into the new loan.
i = Your monthly interest rate. This is your new annual interest rate divided by 12. (e.g., if the annual rate is 3.75%, then i = 0.0375 / 12).
n = The total number of payments over the loan's lifetime. This is the remaining loan term in years multiplied by 12. (e.g., if the remaining term is 25 years, then n = 25 * 12).
Key Considerations for Refinancing:
Closing Costs and Fees: Factor in all origination fees, appraisal fees, title insurance, and other closing costs. These increase your new loan principal and must be recouped through savings.
Break-Even Point: Calculate how long it will take for the monthly savings from refinancing to offset the closing costs. If you plan to move or sell before this point, refinancing might not be financially beneficial.
Loan Term: Deciding whether to keep the same remaining term or opt for a new 15-year or 30-year term impacts your monthly payment and total interest paid. A shorter term means higher monthly payments but less interest over time.
Current Financial Situation: Assess your current and future income, credit score, and the overall economic outlook before making a decision.
Use this calculator as a starting point to estimate potential savings. For precise figures and personalized advice, consult with a mortgage professional.
function calculateRefinancePayment() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var remainingLoanTerm = parseFloat(document.getElementById("remainingLoanTerm").value);
var originationFees = parseFloat(document.getElementById("originationFees").value) || 0; // Default to 0 if not entered
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Validate inputs
if (isNaN(currentLoanBalance) || currentLoanBalance <= 0 ||
isNaN(newInterestRate) || newInterestRate < 0 ||
isNaN(remainingLoanTerm) || remainingLoanTerm 0) {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else { // Handle 0% interest rate scenario
monthlyPayment = principal / numberOfPayments;
}
// Format the result
var formattedMonthlyPayment = monthlyPayment.toFixed(2);
var formattedPrincipal = principal.toFixed(2);
resultDiv.innerHTML = '$' + formattedMonthlyPayment + 'Estimated new monthly Principal & Interest payment';
}