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  • Mortgage 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. (Please note: This calculator is intended to provide approximate information on loan payments and does not constitute an offer to extend credit. Your actual payment information may vary.)


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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 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.
    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.

    Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. All calculations are based on user inputs and do not reflect any guarantee or commitment of the loan, interest rate, expected savings or tax advantage. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.