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Mortgage Calculator: Refinance Breakeven Calculator

Savvy consumers know that by opting to refinance a mortgage at a lower interest rate can result in thousands of dollars of savings over the course of time. However, refinancing is not free and the transaction is levied with many of the same fees and closing costs associated with a first-time mortgage origination. That is why using a Mortgage Marvel Refinance Breakeven Calculator prior to making the decision is advised.

How long it will take to break even on mortgage refinance depends on a multitude of factors. These reasons include the current home loan interest rate, the new potential rate, closing costs and how long a home owner plans on staying put. Consumers should use the Refinance Breakeven Calculator to sort through the confusion and estimate if refinancing a mortgage is a sound financial decision. Individuals simply need to click the "View Report" button for a detailed look at their personal records.



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GLOSSARY

Original Mortgage Amount
The original amount of a mortgage to be entered into a Mortgage Marvel Refinance Breakeven mortgage calculator.

Appraised Value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience and analysis of the property. When the term is used in relation to a mortgage being entered into a Mortgage Marvel mortgage calculator, it refers to the appraised value of a home when purchased.

Current Term In Years
The total term in years on a current mortgage. The term applies to a Refinance Breakeven mortgage calculator.

Years Remaining
The total number of years remaining on a current mortgage being compared in a Mortgage Marvel Refinance Breakeven mortgage calculator.

Income Tax Rate
An estimate of an individual's current income tax rate to be entered into a Mortgage Marvel mortgage calculator. The chart below can be used to estimate tax brackets based on Federal 2013 taxable income. Information about estimating state tax rate can be found at http:/www.taxadmin.org/fta/rate/ind_inc.pdf.

Calculate Balance
In relation to a Mortgage Marvel Refinance Breakeven mortgage calculator, checking this box will let the calculator automatically determine the remaining balance, based on the original mortgage amount information and years remaining. Individuals interested in entering their own information should leave the box unchecked.

Current Appraised Value
In relation to a Mortgage Marvel Refinance Breakeven mortgage calculator, it is the current appraised value of a home.

Loan Balance
The balance of a mortgage that will be refinanced in relation to a Mortgage Marvel Refinance Breakeven mortgage calculator.

New Interest Rate
The annual interest rate for a new loan to be tabulated in the Mortgage Marvel Refinance Breakeven mortgage calculator.

New Term In Years
The number of years for a new loan terms being entered into a Mortgage Marvel Refinance Breakeven mortgage calculator.

Loan Origination Rate This is the percentage of a new mortgage amount that is paid to the lender as the loan origination fee.

Other Closing Costs

Estimate of all other closing costs for a loan being tabulated on a Mortgage Marvel Refinance Breakeven mortgage calculator. This total includes appraisal fees, credit report fees, title charges and any other miscellaneous fees that must be paid.

Points Paid
This is the number of discount points paid to a lender in order to reduce the interest rate on a mortgage. Each point costs 1% of a total mortgage balance.

Current Payment
In relation to a Mortgage Marvel Refinance Breakeven mortgage calculator, the current payment is the sum of principal, interest and private mortgage insurance (PMI).

New Payment
This term directly relates to the Refinance Breakeven mortgage calculator and is the sum of principal, interest and private mortgage insurance. Private mortgage insurance is typically required if a home is financed at more than 80% of a home's value and has been estimated at .9%. Monthly PMI is calculated by multiplying the starting loan balance by this percent and dividing by 12.

Monthly PMI Payment
The monthly cost of private mortgage insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.9% of the home mortgage balance each year. Monthly PMI is calculated by multiplying the starting home loan balance by this percent and dividing by 12. When a home loan balance exceeds 22% of the original purchase price, PMI payments drops to zero.

Monthly Payment (P&I)
The monthly principal and interest payment.

In relation to a Mortgage Marvel mortgage calculator the term refers to the fixed rate mortgage or the interest only payment for an interest only ARM.

Breakeven Monthly Payment Savings

The number of months it will take for a monthly payment reduction to exceed closing costs.

Breakeven PMI & Interest Savings
The number of months it will take for interest and mortgage insurance savings to exceed closing costs.

Breakeven Total Savings After Tax
The number of months it will take for after-tax interest and mortgage insurance savings to exceed closing costs.

Breakeven Total Savings vs. Prepayment
In regards to the Refinance Breakeven Calculator, this is the most conservative breakeven measure. It is the number of months it will take for after-tax interest and mortgage insurance savings to exceed closing costs and any interest savings from prepaying a mortgage. The prepayment amount used in this calculation is the amount that would have to be spent on closing costs.


Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.