Refinance Calculator (3f)

Refinancing an FRM With Balance Pay-down

Who This Calculator is For: Borrowers trying to decide whether paying down
the balance on their existing FRM in order to lower the cost of refinancing
into another FRM would yield a satisfactory rate of return.

What This Calculator Does:This calculator derives the rate of return on investment
in a balance pay-down plus settlement costs that reduces refinance costs,
relative to holding the existing mortgage, and relative to a refinance without the pay-down.

Information About You and Your House
  Expected Years in House, Cannot Exceed Term
  Current Value of House (e.g. 225000)
         Loan Information Current Loan New Loan
w/o Paydown
New Loan with
  Loan Balance  ( New Loan - Calculated Automatically )
  Interest Rate on Loan  (e.g. 7.50)
  Remaining Term on Current Loan (in months) — New Term on New Loans ( in months )
  Monthly Mortgage Insurance Payment (e.g. 96.75)
  Total Closing Costs ( e.g., 2300 )  


This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. The period may be stated in fractions. For example, 25 years and 1 month would be entered as 25.083, 25 years and two months would be 25.167, and 25 years and 3 months would be 25.25, etc. This includes all settlement costs other than points. Any origination fees expressed as a percent of the loan amount should be included in Points. Do not include escrow reserves for taxes and insurance, or prepaid (per diem) interest. If you have not made any extra payments on your loan, this is the original term less the number of monthly payments that have been made. If you have made any extra payments, you can find the period remaining by clicking here and entering your current balance, rate, and monthly payment. Make sure the payment is principal and interest only. (click yellow icon again to make this pop-up disappear) This is the interest rate you could earn on the monies you spend during the period you are in your home. For most people, it would be the interest rate on a bank account or a money market fund. In after-tax cost comparisons, this figure is adjusted to an after-tax basis. The size of the mortgage insurance monthly premium is triggered by the down payment percentage. Mortgage insurance premiums drop significantly as the down payment crosses the 3%, 5%, 10%, 15% and 20% levels. When deciding on your down payment be sure to take this into account. To perform a "pre-tax" analysis select "Pre-Tax" from the drop down list. Estimate all closing costs other than points and enter your estimate for each loan here. For further information, read "How to Shop Settlement Costs". (Click on link at bottom of page) This is required only if your are now paying mortgage insurance. If you are paying mortgage insurance, we need to know the value of your house when the current loan was taken out so that we can figure out when the insurance payment will stop. We assume it stops when the balance reaches 78% of original value. This is required only if you are now paying or will be paying mortgage insurance on the new loan. If you enter a value, mortgage insurance will be terminated when the loan balance equals 80% of the appreciated value of the property. If a refinance without a pay-down is not an option for you leave the center column blank.