|
This calculator helps to answer one simple question -- if you have a little
cash, it is better to use it to refinance to one of the current super low rates,
or simply use it to pay down your mortgage. So if it would cost $1,000 to
refinance from 6.5% to 4.5% right now, should you do it, or take that money
and just lower your current balance. There is always a point at which the
refinance will start saving you money. The question is if you will still own
the loan when that happens and for how long you will keep it. If the breakeven
point is within two years and you hold the loan a long time, it is definitely
worth it. If the breakeven point is in 5 or more years and you probably won't
hold the loan much longer than that, you should just take the closing costs
money and pay down the loan. I calculate my breakeven point as the point when
your loan balance on your refinanced loan minus all your none deductible
interest payment savings (all the cumulative non-deductible interest you've
saved) drops below the loan balance on your existing loan after lowered by the
lump sum prepayment. (When the red "HOLD" changes to
the green REFI).
You can also try using my older, more generic refinancing and loan comparison calculator. |