Estimate your potential monthly savings and total interest paid after refinancing your mortgage.
Your Refinance Estimate
$0.00
Estimated Monthly Savings
$0.00
Total Interest Saved Over New Loan Term
Understanding Mortgage Refinancing
Mortgage refinancing is the process of replacing your existing home loan with a new one. Homeowners typically refinance to take advantage of lower interest rates, shorten their loan term, convert home equity into cash, or switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
The decision to refinance often hinges on whether the long-term benefits, such as reduced interest payments and monthly savings, outweigh the upfront costs associated with the refinance process (closing costs, appraisal fees, etc.).
How the Calculator Works
This calculator helps you estimate the financial impact of refinancing. It compares your current mortgage's payment and total interest paid with the potential new mortgage after refinancing.
Key Calculations:
Current Monthly Payment: Calculated using the standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Balance (Current Loan Balance)
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Remaining Term in Years * 12)
New Monthly Payment: Calculated using the same mortgage payment formula with the new loan terms.
Monthly Savings: The difference between the current monthly payment and the new monthly payment.
Total Interest Paid (Current): The sum of all interest paid over the remaining term of the current loan. This is calculated by summing up the interest portion of each monthly payment.
Total Interest Paid (New): The sum of all interest paid over the term of the new loan.
Total Interest Saved: The difference between the total interest paid on the current loan and the total interest paid on the new loan, after accounting for the refinance fees.
The calculator simplifies the total interest calculation by first calculating the total payments made over the loan term (Monthly Payment * Number of Payments) and then subtracting the principal loan balance. This provides an approximation of total interest paid.
When Should You Refinance?
Consider refinancing when:
Interest Rates Have Dropped Significantly: A drop of 1% or more in interest rates can often make refinancing worthwhile.
Your Credit Score Has Improved: A higher credit score can qualify you for better interest rates.
You Need to Change Your Loan Term: You might want to shorten your loan term to pay off your mortgage faster or extend it to lower monthly payments.
You Want to Tap into Home Equity: Cash-out refinancing allows you to borrow against your home's equity for renovations, debt consolidation, or other needs.
You Want to Switch Loan Types: Moving from an ARM to a fixed-rate loan provides payment stability.
Remember to factor in all closing costs and fees. A common rule of thumb is that if the total closing costs are less than the total savings over the first few years, refinancing is likely a good decision.
function calculateMortgagePayment(principal, annualRate, years) {
var principalNum = parseFloat(principal);
var annualRateNum = parseFloat(annualRate);
var yearsNum = parseFloat(years);
if (isNaN(principalNum) || isNaN(annualRateNum) || isNaN(yearsNum) || principalNum <= 0 || annualRateNum < 0 || yearsNum <= 0) {
return 0; // Invalid input, return 0 for payment
}
var monthlyRate = annualRateNum / 100 / 12;
var numberOfPayments = yearsNum * 12;
if (monthlyRate === 0) {
return principalNum / numberOfPayments;
}
var payment = principalNum * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
return payment;
}
function calculateTotalInterest(principal, monthlyPayment, numberOfPayments) {
var principalNum = parseFloat(principal);
var monthlyPaymentNum = parseFloat(monthlyPayment);
var numberOfPaymentsNum = parseFloat(numberOfPayments);
if (isNaN(principalNum) || isNaN(monthlyPaymentNum) || isNaN(numberOfPaymentsNum) || principalNum <= 0 || monthlyPaymentNum <= 0 || numberOfPaymentsNum 0 ? totalInterest : 0; // Ensure interest isn't negative
}
function calculateRefinance() {
var currentLoanBalance = document.getElementById("currentLoanBalance").value;
var currentInterestRate = document.getElementById("currentInterestRate").value;
var currentRemainingTerm = document.getElementById("currentRemainingTerm").value;
var newInterestRate = document.getElementById("newInterestRate").value;
var newLoanTerm = document.getElementById("newLoanTerm").value;
var refinanceFees = document.getElementById("refinanceFees").value;
var currentLoanBalanceNum = parseFloat(currentLoanBalance);
var currentInterestRateNum = parseFloat(currentInterestRate);
var currentRemainingTermNum = parseFloat(currentRemainingTerm);
var newInterestRateNum = parseFloat(newInterestRate);
var newLoanTermNum = parseFloat(newLoanTerm);
var refinanceFeesNum = parseFloat(refinanceFees);
var monthlySavings = 0;
var totalInterestSaved = 0;
// Validate inputs
if (currentLoanBalanceNum <= 0 || currentInterestRateNum < 0 || currentRemainingTermNum <= 0 || newInterestRateNum < 0 || newLoanTermNum <= 0) {
alert("Please enter valid positive numbers for loan details.");
return;
}
if (isNaN(refinanceFeesNum)) {
refinanceFeesNum = 0; // Treat non-numeric fees as 0
}
// Calculate current mortgage details
var currentMonthlyPayment = calculateMortgagePayment(currentLoanBalanceNum, currentInterestRateNum, currentRemainingTermNum);
var currentTotalPayments = currentRemainingTermNum * 12;
var currentTotalInterest = calculateTotalInterest(currentLoanBalanceNum, currentMonthlyPayment, currentTotalPayments);
// Calculate new mortgage details
var newMonthlyPayment = calculateMortgagePayment(currentLoanBalanceNum, newInterestRateNum, newLoanTermNum);
var newTotalPayments = newLoanTermNum * 12;
var newTotalInterest = calculateTotalInterest(currentLoanBalanceNum, newMonthlyPayment, newTotalPayments);
// Calculate savings
monthlySavings = currentMonthlyPayment – newMonthlyPayment;
var potentialInterestSavings = currentTotalInterest – newTotalInterest;
// Total interest saved needs to account for fees
totalInterestSaved = potentialInterestSavings – refinanceFeesNum;
// Display results
document.getElementById("monthlySavings").innerText = "$" + monthlySavings.toFixed(2);
document.getElementById("totalInterestSaved").innerText = "$" + totalInterestSaved.toFixed(2);
// Show result section
document.getElementById("result").style.display = "block";
}
// Initialize result div visibility
document.addEventListener('DOMContentLoaded', function() {
document.getElementById("result").style.display = "none";
});