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Refinance Breakeven

How long will it take to breakeven on a mortgage refinance? That depends on a multitude of factors. These factors include 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.

 
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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 misc. 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.

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.

The information provided by this calculator is for illustrative purposes only. Accuracy of the result is not guaranteed, and we are not responsible for any errors, omissions, or misrepresentations. The results obtained from this calculator are hypothetical and may not be applicable to your individual situation. This calculator cannot pre-qualify you for any loan program. In order to qualify for any loan program, an application must be submitted for approval. Additional information, such as credit scores, asset and debt information, property value and other information, will be required, and may not be taken into consideration by this calculator. Interest rates and pricing are only examples, are subject to change at any time and without notice, and may not be available at the time of loan application. Additional fees, such as association dues, may not be included in calculations. The information provided does not constitute investment advice. You should not make investment decisions based on results obtained from this calculator. Investment strategies should be reviewed periodically as financial circumstances change. The results of financial calculators may provide a rough approximation of future financial performance, but may not reflect the actual growth of your own investments. We are not responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided by this calculator. You should consult a financial professional prior to relying on the results of this calculator.

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