If you've been wondering if refinancing your mortgages is a good idea, then our refinancing a mortgage calculator can help. We'll let you compare the monthly payment for each loan, so you can see how much you might save each month. The calculator requires two types of inputs: one for the existing mortgage, and one that represents the refinancing option. The calculator provides the savings achieved through refinancing on a monthly basis, as well as the savings over the life of the loan.
The variables used in our online calculator are defined in detail below, including how to interpret the results.
This is the amount you originally borrowed from your lender when you got this mortgage. This is sometimes referred to as the original principal of the loan.
This is the annual interest rate you were charged on the original mortgage. This is not the APR, which takes into account other costs associated with the mortgage.
The term of the original mortgage, stated in years, is the number of years over which the mortgage will be repaid. The most common mortgage terms are 15, 20, and 30 years
This is the number of months you have left on the original mortgage. This value is used by the calculator to estimate the remaining principal balance on the loan.
This next series of calculator inputs deal with the refinancing option that you might be considering.
This is the home loan amount you are considering refinancing. To make the comparison fair, the new home loan amount should be about equal to the remaining balance of the original loan, which is computed by this calculator.
If you want to increase the accuracy of a comparison between an existing mortgage and a refinanced one, then you might want to consider using the Annual Percentage Rate, or APR, as the input here. The true monthly payment you will make is based on the Interest Rate of the loan, while the overall cost of the loan is considered in the Annual Percentage Rate (which is normally a higher value than the interest rate). The APR takes into consideration all of the costs of a mortgage, including points and application fees.
This is the new term of the refinanced mortgage you are considering. Many times homeowners refinance their mortgages to take advantage of lower interest rates, which often allows them to shorten the length of their mortgage payment or lower their monthly payment.
Based on the number of months you have remaining on your original loan, this is the computed balance, or principal. To increase the accuracy of the savings calculation, the new home loan amount should be roughly equal to the remaining balance on the original loan.
This is the monthly mortgage payment for the original loan itself. This does not include mortgage insurance or property taxes, which are sometimes included with your mortgage payment.
Based on earlier inputs you've provided, this is the calculated monthly payment for the refinanced mortgage. If you used the Annual Percentage Rate for the new loan as an input, this value is the effective monthly payment, which makes the savings comparison more accurate. If you used the interest rate for the refinancing evaluation, then this value is the actual monthly payment due on the loan.
This is the savings you will realize each month by refinancing your existing mortgage. This value is the difference between the original monthly payment and the monthly payment with refinancing.
If you decided not to refinance your mortgage, and continued to pay down your existing loan, this is how much money you will have to pay to the bank or lending institution.
If you decide to refinance your mortgage, this is the total money you would have to pay to the bank or lending institution. If you used the APR as a proxy for the interest rate earlier, then this cost includes points and fees. If you used the simple interest rate earlier, then points and fees are not included in these costs.
Keep in mind that if you refinance a mortgage, you will very likely have to go through a closing, and those costs should be less than the savings or loss you achieve by refinancing. In other words, if the closing costs are greater than the refinancing savings, then it may not be worthwhile to refinance the loan.
If you decide to refinance your mortgage, this is the potential savings you might realize over the term of the loan. A positive number in this cell indicates savings, while a negative value indicates increased costs.
Refinancing a Mortgage Calculator - Copyright © 2006 - 2015 Money-Zine.com (Last Reviewed on February 2, 2015)
Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.