How to calculate savings if refinancing a mortgage

[loporjai2003]

Hi,

Is there a site/calculator that can show the break-even point and #'s associated with refinancing a mortage ?

Rates are low now and if refinancing to a lower fixed rate, like to see how long it would take to come out ahead, including the mortgage penalties for breaking an existing one.

[wx_junkie]

If you're on a fixed rate currently, send me your numbers, and I'll tell you what your break-even interest rate is (ie, what rate you need to get to wind up further ahead even after paying penalty). I need your current rate, mortgage amount, penalty, current payment, amortization and what's remaining on your term.

If you're on variable rate, this can't be computed since you cannot predict future interest rates.

[loporjai2003]

If you're on a fixed rate currently, send me your numbers, and I'll tell you what your break-even interest rate is (ie, what rate you need to get to wind up further ahead even after paying penalty). I need your current rate, mortgage amount, penalty, current payment, amortization and what's remaining on your term.

If you're on variable rate, this can't be computed since you cannot predict future interest rates.

It's a fixed rate. Is there a formula for this ? I rather do it myself for privacy and learning as well.

[wx_junkie]

No problem. I just went through the same exercise a few weeks ago to answer the very same question for myself.

I don't have a formula, just run a bunch of amortization schedules at different rates to see where your break-even mark is. Just don't forget to adjust the amortization so that the monthly payments with each run is the same so you're comparing apples to apples.

If you still want some assistance at the end of the day, PM me with the details.

[DrXenon]

The Excel CUMIPMT function is your friend here. (you have to install the free analysis toolpack to get it)

To compute the interest you'll pay in the 5th year on a $100000, 25 year biweekly accelerated mortgage at 4.2%/year, you'd do:

=CUMIPMT(4.2%/26,26*25,100000,4*26,5*26,0)

[sslinn]

I would suggest googling vertex42 and looking at there calculators if you need help with any formulas in excel. It is a great resource.