Mortgage Refinancing

Should you refinance your mortgage? 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.

This Financial Calculator requires a Browser with Java Support

Definitions

Original mortgage amountOriginal amount of your mortgage.
Appraised valueThe appraised value of your home when you purchased it.
Current term in yearsTotal length of your current mortgage in years.
Years remainingNumber of years remaining on your current mortgage.
Income tax rateYour current income tax rate.
Calculate balanceTo 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 valueThe current appraised value of your home.
Loan balanceBalance of your mortgage that will be refinanced.
New interest rateThe annual interest rate for the new loan.
New term in yearsNumber of years for your new loan.
Loan origination rateThis 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 costsEstimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other misc. fees paid.
Points paidThis 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 paymentYour current payment is the sum of principal, interest and PMI. Because refinancing does not affect your insurance or taxes they are not included here.
New paymentYour new payment is the sum of principal, interest and PMI.
Monthly PMI paymentMonthly 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 your loan balance exceeds 20% of the original purchase price, your PMI payment drops to zero.
Monthly PI paymentMonthly principal and interest payment.
Breakeven monthly payment savingsThe number of months it will take for your monthly payment reduction to be greater than your closing costs.
Breakeven PMI & interest savingsThe number of months it will take for your interest and PMI savings to exceed your and closing costs.
Breakeven total savings after taxThe number of months it will take for your after tax interest and PMI savings to exceed your closing costs.
Breakeven total savings vs. prepaymentThis 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.


information and interactive calculators are made available to you as self-help tools for your independent use. We can not and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

 

*These materials are not an offer to sell or solicitation of an offer to buy any security, nor shall any such security be offered or sold to any person, in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.

IMPORTANT CONSUMER INFORMATION

(1) A broker-dealer, investment advisor, BD agent or IA rep may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if they are excluded or exempted from the state's broker-dealer, investment advisor, BD agent or IA rep requirements, as the case may be; and
(2) Follow-up, individualized responses to consumers in a particular state by broker-dealer, investment advisor, BD agent or IA rep that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's broker-dealer, investment advisor, BD agent or IA rep requirements, or pursuant to an applicable state exemption or exclusion. (3) For information concerning the licensure status or disciplinary history of a broker-dealer, investment advisor, BD agent or IA rep, a consumer should contact his or her state securities law administrator.