This calculator determines whether it makes sense to refinance your mortgage. It looks at the current mortgage rate (TPE provides an initial suggestion but you can override it). We use a payback period of x years to determine whether it makes sense for you to refinance now based on the costs of refinancing and how long it will take you to earn back the fees.
We use 3 years as the default payback period, but you can override this based on your time horizon and how long you expect to be in your home.
The inputs you need to provide include the mortgage amount term (in years), your current interest rate (borrower rate), market rate (for which we will provide a default suggestion), points and fees for refinancing and term to break even threshold (for which we use 3 years by default but the user can override this).
It determines whether refinancing your mortgage makes financial sense by comparing the upfront costs of refinancing to how long it would take to earn those costs back through lower payments.
The payback period is how long it takes for the savings from a lower rate to cover the points and fees of refinancing. The calculator uses a 3-year default, but you can override it based on how long you actually expect to stay in your home.
TPE provides an initial suggested market rate, but you're free to override it with your own quote if you have one — the calculator then compares that rate to your current mortgage rate.
You'll need your mortgage amount, loan term, current interest rate, the market rate you're evaluating (a default is suggested), the points and fees for refinancing, and optionally your own break-even threshold if you don't want to use the 3-year default.
The House Affordability Calculator can help you understand how much mortgage you can handle in the first place, and the Home Valuation Calculator can help you check your home's current value before refinancing.
