Mortgage Refinance Calculation Analysis
To Refinance or not to refinance; that is the biggest question among so many home owners

Some things to think about or that make you think it might be a good time to refinance your mortgage

  1. Current interest rates are lower then your current mortgage rate.
  2. Currently in an adjustable rate mortgage and want the comfort or consistency of a fixed rate mortgage.
  3. Use the low rates to reduce your debt load
  4. More items to come along with the completion of the calculation analysis tool.. book mark this page and return often
Enter details about your existing fixed rate mortgage
Original loan amount
Interest rate (e.g. 5.75)
Number of years (15, 30, etc.)
Beginning year (e.g. 2001)
Beginning month (1-12)

With the original mortgage details completed now consider the new loan. Consider including the finance costs in the new loan. Most often the lender will allow inclusion of these costs. Lender web sites often will provide an estimate of the cost to refinance. Or you may want to take cash out and in this case increase the new loan base to the amount desired. If cash out is considered then also complete the box for refinance costs so this can be included in the analysis.

Enter details about the new fixed rate mortgage
New loan base (excluding refi costs)
Interest rate (e.g. 5.75)
Number of years (15, 30, etc.)
Analyze refinance cost? Include amt:
**Reduce principal with additional payment :yes no

With a reduced overall monthly payment due to a lower interest rate you'll have to decide: Do you stick the extra money in the bank or in some other way invest those extra dollars or do you use the extra dollars to increase the monthly principal payment to pay the loan off sooner. For the most part this is a personal preference and a personal decision. First ensure the new loan does not contain a prepayment penalty. In other words will the lender hit you with an extra fee if you pay off the loan before the contracted schedule. Assuming there is no prepayment penalty then decide if you wish to use the extra funds to pay down the principal.

** - Select 'Yes' and the entire monthly savings will be applied to the outstanding balance until it reaches zero with the duration provided below.

When analyzing an existing loan to a new loan pay more attention to the change in the interest payments. The principal payments will be amortized over the life of the loan thus the total amount of principal to be paid is unaffected by the change in interest rate. A lower interest will allow for paying more principal due to the lower interest payments. Also consider how much longer you will maintain this loan before selling or again refinancing. If the total interest to be paid for the new loan is greater then the remaining interest on the current loan then it may not make sense. See when the new loan interest exceed the existing loan.

Comparisons Current MortgageNew Mortgage
Remaining Interest
Payment (PI)
Current month Principal (P)
Current month Interest (I)
New loan interest will exceed current loan in
Notice if and if so when the new loan interest payments exceed the existing loan. Do you plan on selling or refinancing again before the cross over occurs (). Deciding whether to refinance your 15 year or 30 year fixed rate mortgage isn't as easy, or complete, as simply determining the cost to refinance (closing costs which include among other things discount points, origination fees, lender fees, etc.) and dividing the closing costs by the amount of monthly payment savings from from your new loan's first month interest savings. I will explain in more detail comparing an example current mortgage with a projected refinance mortgage. When time allows go into detail about PITI, why not to use the PI in PITI for calculation against the new mortgage describe the simple break even point, compare to total interest if paid to the end of either loan

I hope this information has been of help to someone as you try to decide whether to refinance your mortgage to a lower interest that will truly save money in the long run. Remember mortgage brokers want your business regardless of any perceived savings whether they be real or not. This information is not provided by or sponsored by any lender and is intended as informational only.