Refinancing Comparison Calculator
Refinancing involves replacing an existing financial obligation with a new one, often to secure more favorable terms. This could mean a lower annual percentage rate, a different payment schedule, or a change in the total duration of your commitment. This calculator helps you compare your current financial commitment against a proposed new one, providing insights into potential monthly payment changes, total cost implications, and the break-even point for any associated setup costs.
Compare Your Commitments
Current Commitment Details
The outstanding principal amount on your current obligation.
The annual percentage rate you are currently paying.
The number of months remaining on your current payment schedule.
Proposed New Commitment Details
The total principal amount for the new obligation. This may include your current principal plus any new commitment setup costs rolled in.
The annual percentage rate offered for the new obligation.
The total number of months for the new payment schedule.
Any upfront fees or costs associated with setting up the new commitment.
Refinance Comparison Results
Current Monthly Payment: $
New Monthly Payment: $
Monthly Payment Change: $ ()
Total Remaining Cost (Current Commitment): $
Total Cost (New Commitment): $
Total Cost Change: $ ()
Break-even Point for Setup Costs:
Understanding Refinancing
Refinancing is a strategic financial move where you replace an existing debt or financial obligation with a new one. This new obligation typically comes with different terms, which can be more advantageous depending on your financial goals and market conditions. Common reasons for refinancing include:
- Lowering Your Annual Percentage Rate: If market rates have dropped or your credit profile has improved, you might qualify for a lower annual percentage rate, reducing the overall cost of your commitment.
- Reducing Monthly Payments: By securing a lower rate or extending the payment periods, you can decrease your monthly financial outflow, freeing up cash for other needs.
- Changing Payment Periods: You might want to shorten your payment periods to pay off the obligation faster and save on total cost, or extend them to reduce monthly payments.
- Accessing Cash: In some cases, refinancing allows you to borrow more than your outstanding principal, providing cash for other expenses (often called a "cash-out refinance").
Key Terms Explained:
- Current Principal Value: This is the remaining balance on your existing financial commitment.
- Current Annual Percentage Rate: The yearly rate at which your current outstanding value accrues.
- Current Remaining Payment Periods: The number of monthly payments you still have left on your current schedule.
- Proposed Principal Value: The total amount of the new financial commitment. This often includes the current principal plus any new commitment setup costs if they are rolled into the new obligation.
- Proposed Annual Percentage Rate: The yearly rate offered for the new financial commitment.
- Proposed Total Payment Periods: The full duration, in months, of the new payment schedule.
- New Commitment Setup Costs ($): These are the fees and expenses incurred when establishing the new financial commitment, such as application fees, appraisal costs, or legal fees.
Interpreting the Results:
- Monthly Payment Change: A positive value indicates monthly savings, while a negative value means your new monthly payment will be higher.
- Total Cost Change: This compares the total remaining cost of your current commitment to the total cost of the new commitment (including setup costs). A positive value indicates total savings over the life of the new commitment, while a negative value means the new commitment will cost more overall. Be mindful that extending payment periods can lead to lower monthly payments but a higher total cost.
- Break-even Point: This tells you how many months it will take for your monthly savings to offset the upfront new commitment setup costs. If you plan to keep the new commitment for longer than the break-even point, refinancing is generally financially beneficial.
Always consider your long-term financial goals and consult with a financial advisor before making significant refinancing decisions.
function calculateRefinance() { var currentPrincipalValue = parseFloat(document.getElementById('currentPrincipalValue').value); var currentAnnualPercentageRate = parseFloat(document.getElementById('currentAnnualPercentageRate').value); var currentRemainingPeriods = parseFloat(document.getElementById('currentRemainingPeriods').value); var proposedPrincipalValue = parseFloat(document.getElementById('proposedPrincipalValue').value); var proposedAnnualPercentageRate = parseFloat(document.getElementById('proposedAnnualPercentageRate').value); var proposedTotalPeriods = parseFloat(document.getElementById('proposedTotalPeriods').value); var newCommitmentSetupCosts = parseFloat(document.getElementById('newCommitmentSetupCosts').value); // Validate inputs if (isNaN(currentPrincipalValue) || isNaN(currentAnnualPercentageRate) || isNaN(currentRemainingPeriods) || isNaN(proposedPrincipalValue) || isNaN(proposedAnnualPercentageRate) || isNaN(proposedTotalPeriods) || isNaN(newCommitmentSetupCosts) || currentPrincipalValue < 0 || currentAnnualPercentageRate < 0 || currentRemainingPeriods <= 0 || proposedPrincipalValue < 0 || proposedAnnualPercentageRate < 0 || proposedTotalPeriods <= 0 || newCommitmentSetupCosts 0 ? 'Savings' : (monthlyPaymentChange 0 ? 'Savings' : (totalCostChange 0) { breakEvenPoint = (newCommitmentSetupCosts / monthlyPaymentChange).toFixed(1) + ' months'; } else if (newCommitmentSetupCosts > 0) { breakEvenPoint = 'No break-even (monthly payment not reduced)'; } else { breakEvenPoint = 'No setup costs to break even on'; } document.getElementById('displayCurrentMonthlyPayment').textContent = currentMonthlyPayment.toFixed(2); document.getElementById('displayNewMonthlyPayment').textContent = newMonthlyPayment.toFixed(2); document.getElementById('displayMonthlyPaymentChange').textContent = Math.abs(monthlyPaymentChange).toFixed(2); document.getElementById('displayMonthlyPaymentStatus').textContent = monthlyPaymentStatus; document.getElementById('displayTotalCurrentCost').textContent = totalCurrentCost.toFixed(2); document.getElementById('displayTotalNewCost').textContent = totalNewCost.toFixed(2); document.getElementById('displayTotalCostChange').textContent = Math.abs(totalCostChange).toFixed(2); document.getElementById('displayTotalCostStatus').textContent = totalCostStatus; document.getElementById('displayBreakEvenPoint').textContent = breakEvenPoint; document.getElementById('result').style.display = 'block'; }