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Mortgage Refinance/Breakeven Calculator

How long will it take to breakeven on a mortgage refinance? That depends on a multitude of factors including your current interest rate, the new potential rate, closing costs and how long you plan to stay in your home. Use this calculator to sort through the confusion and determine if refinancing your mortgage is a sound financial decision. Click the "View Report" button for a detailed look at your records.

Definitions

Original mortgage amount
Original amount of your mortgage.

 

Appraised value
The appraised value of your home when you purchased it.

 

Current term in years
Total length of your current mortgage in years.

 

Years remaining
Number of years remaining on your current mortgage.

 

Income tax rate
Your current income tax rate.

 

Calculate balance
To let the calculator determine your remaining balance, based on your original loan information and years remaining, check this box. To enter your own amount, leave this box unchecked.

 

Current appraised value
The current appraised value of your home.

 

Loan balance
Balance of your mortgage that will be refinanced.

 

New interest rate
The annual interest rate for the new loan.

 

New term in years
Number of years for your new loan.

 

Loan origination rate
This is the percentage of the new mortgage that is paid to the lender as the loan origination fee. Typically, this fee is 1% of the loan balance.

 

Other closing costs
Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.

 

Points paid
This is the number of points paid to the lender to reduce the interest rate on the mortgage. Each point costs 1% of the new loan amount.

 

Current payment
Your current payment is the sum of principal, interest and PMI (Principal Mortgage Insurance). Because refinancing does not affect your insurance or taxes, they are not included here.

 

New payment
Your new payment is the sum of principal, interest and PMI.

 

Monthly PMI payment
Monthly cost of Principal Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year. Monthly PMI is calculated by multiplying your starting loan balance by this percent and dividing by 12. When the equity in your home exceeds the percentage required for PMI, your PMI payment drops to zero.

Normally PMI is required if you have less than 20% equity in your home, however for the refinance of loan guaranteed by Freddie Mac or Fannie Mae you may not be required to pay PMI if your current mortgage doesn't require it. Check with your lenders for details. Check the box "do NOT include PMI" if this applies to your refinance.

 

Monthly PI payment
Monthly principal and interest payment.

 

Breakeven monthly payment savings
The number of months it will take for your monthly payment reduction to be greater than closing costs.

 

Breakeven PMI & interest savings
The number of months it will take for your interest and PMI savings to exceed your closing costs.

 

Breakeven total savings after-tax
The number of months it will take for your after-tax interest and PMI savings to exceed your closing costs.

 

Breakeven total savings vs. prepayment
This is the most conservative breakeven measure. It is the number of months it will take for your after-tax interest and PMI savings to exceed both your closing costs and any interest savings from prepaying your mortgage. The prepayment amount used in this calculation is the amount that you would have to spend on closing costs.