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Online Refinance Calculator
Use the Online Refinance Calculator to evaluate potential savings by refinancing your loan. Calculate monthly payments, monthly savings, break-even points, and total interest savings quickly and accurately.
| Refinance | |||
|---|---|---|---|
| Monthly savings for the new loan ($) | 278.00 | ||
| Lifetime savings for the new loan ($) | 83,400.00 | ||
| Upfront cost ($) | 6,583.26 | ||
| CURRENT LOAN ($) | NEW LOAN ($) | DIFFERENCE ($) | |
| Principal/Loan Amount ($) | 279,163.18 | 273,579.92 | -5,583.26 |
| Length (Months) | 300 | 300 | 0 |
| Interest Rate | 6% | 4.5% | 1.5% |
| Monthly Pay ($) | 1,798.65 | 1,520.65 | -278.00 |
| Total Payments ($) | 539,595.00 | 456,195.00 | -83,400.00 |
| Total Interest ($) | 260,431.82 | 182,615.08 | -77,816.74 |
| Points Equivalent To ($) | 5,583.26 | ||
| Points Equivalent To ($) | $6,583.26 | ||
| Cash Out ($) | NA | ||
| Take Home Amount After Cost/Point ($) | NA | ||
| Time to Recover Cost/Point (Months) | 23.68 | ||
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What Is This Tool?
This calculator helps homeowners and borrowers assess the financial impact of refinancing a loan. It computes monthly payments for both existing and refinanced loans, estimates monthly savings, break-even timeline, and total interest saved using standard amortization formulas.
How to Use This Tool?
- Enter your current loan balance, interest rate, and remaining term.
- Input the refinancing interest rate, term, and any associated refinance costs.
- Click the calculate button to see monthly payment amounts, monthly savings, break-even period, and total interest savings.
- Review the results to decide if refinancing could be advantageous based on your financial goals.
Key Features
- Calculates monthly payments based on loan principal, interest rate, and term.
- Computes monthly savings comparing original and refinanced payment amounts.
- Determines the break-even point in months based on upfront refinance costs and monthly savings.
- Estimates total interest savings over the life of the loan.
- Uses precise floating-point calculations for accurate amortization results.
Examples
- A borrower with a $200,000 loan at 6% APR and 25 years remaining refinancing at 4.5% APR for the same term with $3,000 costs sees the monthly payment drop from $1,289.99 to $1,111.72, saving $178.27 monthly.
- The break-even for these refinance costs is approximately 16.8 months, showing how long it takes for savings to cover upfront expenses.
Common Use Cases
- Homeowners evaluating if refinancing their mortgage will reduce monthly payments and total interest.
- Mortgage brokers assisting clients in understanding financial benefits of loan refinancing.
- Financial advisors calculating potential savings and break-even points for clients considering refinancing.
Tips & Best Practices
- Ensure all loan details like interest rates and terms are accurate for reliable results.
- Consider your expected time in the home when evaluating break-even periods.
- Use the tool to compare multiple refinance scenarios before making decisions.
- Remember to include all upfront refinance costs for a realistic break-even calculation.
Limitations
- Does not account for variable interest rate loans that may change over time.
- Excludes any potential tax implications related to refinancing.
- Does not incorporate changes in insurance or escrow expenses.
Frequently Asked Questions
- What variables are needed to use the refinance calculator?
- You need the loan principal, monthly interest rates derived from APR, the number of monthly payments, and any refinance-related costs.
- How is the monthly payment calculated?
- Monthly payments are computed using the amortization formula M = (P × r × (1+r)^n) / ((1+r)^n - 1), where P is principal, r is monthly interest rate, and n is number of payments.
- What does the break-even point tell me?
- The break-even point indicates how many months it will take for your monthly savings to cover the upfront refinance costs.
Key Terminology
- P
- Loan principal amount being refinanced.
- r
- Monthly interest rate calculated as APR divided by 12.
- n
- Total number of monthly payments, typically loan term multiplied by 12.
- M_old
- Monthly payment amount for the existing original loan.
- M_new
- Monthly payment amount for the refinanced loan.
- Refinance Costs
- Upfront fees and expenses associated with refinancing the loan.